Morellec, Nikolov, and Schürhoff (2012) predict that a self-interested manager prefers a leverage level that is lower than the shareholders' desired level, and effective corporate governance encourages timely capital structure rebalancing. In a U.S. sample during 1996-2008, we confirm that both...

Empirical evidence overwhelmingly supports a negative relation between the strictness of labor protection laws and a firm’s financial leverage. Given the unique economic and financial environments in China, we examine if the same relationship applies to Chinese firms after the enactment of the...