Particularly since the passage of ERISA, institutional investors have increasingly been willing to consider potential investments that traditionally have been considered highly speculative. Indeed, some institutional investors now routinely use options and futures, instruments that formerly were...

Financial economists have generally asserted that, in a world of corporate taxes and bankruptcy costs, the debt level of a firm is negatively related to its risk. Surprisingly, our paper shows that neither the face value of debt, the market value of debt, nor the ratio of market value of debt to...