We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of … corporate credit risk relative to the US, and when european firms value more than US firms the flexibility and information …

-cycle risk as well as individual risk, a profit maximizing arrangement is not simple debt, but rather a contract with mixed debt …-level economic conditions. <bR><bR>We argue that the tax system encourages corporations to absorb more business cycle risk than they … relevant for responding to business-cycle risk. However, because of the diffuse ownership pattern of much of the newly issued …

are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads … are negatively related to the "exogenous'' component of cash holdings that is independent of credit risk factors …, suggesting that precautionary savings are central to understanding the effects of cash on credit risk …

. More risk-averse entrepreneurs default earlier, but also choose higher leverage, even though leverage makes his equity more … risky. Non-diversified entrepreneurs demand both systematic and idiosyncratic risk premium. Cash-out option and external … equity further improve diversification and raise the entrepreneur's valuation of the firm. Finally, entrepreneurial risk …

This paper models a firm's rollover risk generated by conflict of interest between debt and equity holders. When the …

-generating strategy typically lowers the fund's risk-adjusted excess return due to frictions such as price pressure. When the manager is … via both management and incentive fees, we show that (i) the high-powered incentive fees encourage excessive risk taking … sufficiently poor fund performances substantially curtail managerial risk-taking, provide strong incentives to de-leverage, and …

aggregate risk. We propose a theory to explain these risk exposures. We study a financial accelerator model where entrepreneurs … inefficiently high risk exposure for entrepreneurs …