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Taxation, Corporate Financial Policy and the Cost of Capital
Auerbach, Alan J. - 2021
The cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system. The purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest, via the cost of...
Persistent link: https://www.econbiz.de/10013232028
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The Real and Financial Implications of Corporate Hedging
Campello, Murillo - 2010
of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable …
Persistent link: https://www.econbiz.de/10013134932
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Behavioral Corporate Finance : An Updated Survey
Baker, Malcolm P. - 2011
We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The … on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical …
Persistent link: https://www.econbiz.de/10013121051
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Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity
Khan, Aubhik - 2011
We study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In our model economy, optimal capital reallocation is distorted by two frictions:...
Persistent link: https://www.econbiz.de/10013121072
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Are Corporate Default Probabilities Consistent with the Static Tradeoff Theory?
Hovakimian, Armen - 2011
Default probability plays a central role in the static tradeoff theory of capital structure. We directly test this … theory by regressing the probability of default on proxies for costs and benefits of debt. Contrary to predictions of the … theory, firms with higher bankruptcy costs, i.e., smaller firms and firms with lower asset tangibility, choose capital …
Persistent link: https://www.econbiz.de/10013121593
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Customer Capital
Gourio, Francois - 2011
Firms spend substantial resources on marketing and selling. Interpreting this as evidence of frictions in product markets, which require firms to spend resources on customer acquisition, this paper develops a search theoretic model of firm dynamics in frictional product markets. Introducing...
Persistent link: https://www.econbiz.de/10013122655
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Financing Labor
Benmelech, Efraim - 2011
Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by demonstrating that the responsiveness of employment decisions to firms' financial health is quantitatively similar to the much-studied...
Persistent link: https://www.econbiz.de/10013123688
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Cash Holdings and Credit Risk
Acharya, Viral V. - 2011
Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for...
Persistent link: https://www.econbiz.de/10013125920
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Financial Constraints on Corporate Goodness
Hong, Harrison G. - 2012
An influential thesis, dubbed "Doing well by doing good," argues that corporate social responsibility is profitable. But heterogeneity in firm financial constraints can induce a spurious correlation between profits and goodness even if the motives for goodness are non-profit in nature. We use...
Persistent link: https://www.econbiz.de/10013099127
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Corporate Taxes and Internal Borrowing within Multinational Firms
Egger, Peter H. - 2012
This paper develops a theoretical model of multinational firms with an internal capital market. Main reasons for the emergence of such a market are tax avoidance through debt shifting and the existence of institutional weaknesses and financial frictions across host countries. The model serves to...
Persistent link: https://www.econbiz.de/10013100410