risk on firms' debt versus equity choices. Design/methodolgy/approach - The paper uses a firm-level panel data covering the …. Findings – The results suggest that firms considerably take into account both firm-specific and economic risk when making … that firms are more (less) likely to do external financing when firm-specific (macroeconomic) risk is high. The results of …

regime switching model with a state-dependent cash flow process to capture macroeconomic risk in a firm's cash flow. Our … ratios, benefits to leverage, and costs of operating at a non-optimal leverage. If macroeconomic risk decreases, i … risk. The regime switching property of EBIT traces observed EBIT paths closely and is applicable to a wide range of …

This paper develops a structural equilibrium model with intertemporal macroeconomic risk, incorporating the fact that …

cycle risk. In particular, growth options are more sensitive to regime changes than invested assets. "Growth firms" are …