This survey provides a synthesis of the empirical capital structure literature. Our synthesis is divided into three parts. The first part examines the evidence that relates to the cross-sectional determinants of capital structure. This literature identifies and discusses the characteristics of...

This study explores the distress risk anomaly — the tendency for stocks with high credit risk to perform poorly — among 38 countries over two decades. We find a strong, negative link between default probabilities and equity returns, concentrated among low-capitalization stocks in developed...