In the past decade, many U.S. companies have launched aggressive share repurchase programs with the expectation that value can be created by returning excess capital to shareholders and moving the firm closer to its optimal capital structure. But how much capital does a company really need to...

This paper compares U.S. firms that issued or repurchased significant amounts of equity between 1978 and 1993 to those that issued or repurchased debt. We find that firms are most likely to increase debt and repurchase equity when they have less debt than is predicted by a cross-sectional...

This study finds that highly levered firms lose substantial market share to their more conservatively financial competitors in industry downturns. Specifically, firms in the top leverage decile which experience output contractions see their sales decline by 26 percent more than do firms in the...

This paper compares the characteristics of U.S. firms which issued equity between 1976 and 1993 to those which increased their use of debt financing. We find that fims are most likely to issue debt when they have less debt than ispredicted by a cross-sectional model. In addition, firms that were...