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approximately 2% of firm value for a firm whose credit rating falls from AA to BBB, comparable to the magnitude of debt tax benefits …
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In many countries, the legal system or social norms ensure that firms are stakeholder oriented. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition....
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On October 26, 2008, Porsche announced a largely unexpected domination plan for Volkswagen. The resulting short squeeze in Volkswagen's stock briefly made it the most valuable listed company in the world. We argue that this was a manipulation designed to save Porsche from insolvency and the...
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rating agencies. We also document for the first time that firms responded to tax incentives to use debt during the Depression … era, but that the extra debt used in response to this tax-driven "debt bias" did not contribute significantly to the … 1928 to 1938. We find that firms with more debt and lower bond ratings in 1928 became financially distressed more …
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