Modigliani and Miller present an equity-quantity shifting equilibrating process to achieve an optimal firm value in the presence of corporate taxes. However, in the era in which they derived their various propositions regarding the relation between a firm’s value and its capital structure,...

We provide a tradeoff model of the capital structure that allows leverage to be a function of a firm’s choice of tax aggressiveness. The model’s testable implications are supported empirically. Debt use is inversely related to corporate tax aggression for most firms, and the relation is...

This study examines the extent to which individual demographic characteristics of owners influence capital structure decisions. Using the Federal Reserve's 2003 Survey of Small Business Finances, we estimate the joint effects of traditional capital structure determinants and manager age, gender,...