their leverage …

issuer firms expand their total assets and fixed assets, and also raise their leverage …

We revisit the relation between equity returns and financial leverage through the lens of a trade-off model with costly … returns depend on whether a firm's leverage is above or below its target leverage. The data support the model predictions …. Controlling for leverage, overlevered (underlevered) firms earn higher (lower) returns. Controlling for target leverage the …

tax benefit of debt (net and gross of investor taxes) and the debt ratio. A 10% increase in the net (gross) marginal tax … also be identified in a partial adjustment model. -- Debt ; capital structure ; marginal tax rate ; corporate taxes … simulate marginal tax rates, we find a statistically and economically significant positive relationship between the marginal …

firms rely heavily on equity financing, even though benefits associated with debt (like tax shields) appear to be high and …. Debt, however, has an adverse effect on the enforceability of these arrangements because too much debt increases the firm … analysis provides an explanation for why some firms only use little debt financing. Predictions made by our theory are in line …

reduce adverse selection and improve the pricing of newly issued debt. Over time, the benefits of learning decrease and zero-leverage …I develop a dynamic model of financing decisions and optimal debt maturity choice in which creditors face adverse … selection and learn about the firm's quality from news. In equilibrium, shareholders may choose to postpone debt issuance to …

formed and how they impact leverage and debt maturity choices. In the model, lending relationships evolve through repeated … interactions between firms and debt investors. Stronger lending relationships lead firms to adopt higher leverage ratios, issue …Lending relationships matter for firm financing. In a model of debt dynamics, we study how lending relationships are …