We analyse interactions of simultaneous shifts in comprehensive balance sheet items annually and identify common (latent) factors, which are consistent across years. Five factors are interpreted to reflect five major decisions in businesses: Financial Flexibility, Short-term Credit, Long-term...

We examine the interaction between equity returns and firms’ financing policies in a stochastic Ramsey model with heterogeneous firms. Motivated by empirical evidence, firms maintain stationary financial leverage ratios by issuing debt. We present a novel closed-form solution to this class of...