This paper argues that corporate debt maturity policy affects investor tax-timing options to tax-trade corporate securities. In a multiperiod model with interest rate uncertainty, we establish that a long-term debt maturity strategy maximizes investor tax-timing option value. The analysis...

The principal focus of the analysis is on the valuation of a call provision on a bond in an environment wherein investors have progressive tax rates which positively covary with interest rates. Under the conditions of Miller's bond market equilibrium, it is shown that the decision to issue a...

"We examine stock and bond price reactions to CEOs' first stock option and/or restricted stock grants that appear on ExecuComp. We find positive stock price and negative bond price reactions. Changes in CEO pay-performance (delta) and stock volatility (vega) sensitivities relate to the...

In a June 12, 1990 Wall Street Journal article entitled "Warning Flag: When a Firm's Stocks and Bonds Diverge," the stocks and bonds of companies such as Pan Am and TWA were cited as being clearly mispriced. How, the article asked, could Pan Am's stock be trading at $2.50 per share when its...

Under incomplete contracting, limited liability creates differential valuations of investments from private and government perspectives. Managers in the private sector tend to over-invest in risky technologies, compared to levels of investment that are optimal from the standpoint of the society...