ofthis theory of capital structure evolution is that optimal capital structure is essentiallydynamic, and depends on the firm …’s stock price, implying that firms issue equity when stockprices are high and debt when stock prices are low. The theory … testablepredictions. Moreover, the theory can rationalize the use of debt in the absence of taxes,agency costs or signaling considerations. …

This article proposes a theory of corporate transparency and its determinants. We show that under imperfect product … preferred by equity holders. The theory predicts a clustering of firm characteristics that emerge when capital markets are not …