This paper examines the dynamic relationship between firm leverage and risktaking. We embed the traditional agency problem of asset substitution within a multi-period model, revealing a U-shaped relationship between leverage and risktaking, evident in data from both the U.S. and Europe. Firms...

This paper provides empirical evidence of a clientele effect between institutional holdings and debt maturity structure. Using a new measure of debt maturity that captures the refinancing and underinvestment risks associated with the timing of cash flows, I find that institutional equity holders...

We develop a dynamic investment options framework with optimal capital structure and analyze the effect of debt maturity. We find that in the absence of financing constraints short-term debt maximizes firm value. In contrast with most literature results, in the absence of constraints, higher...

This paper quantifies the “human costs of bankruptcy” by estimating employee wage losses induced by the bankruptcy filing of employers using employee-employer matched data from the U.S. Census Bureau’s LEHD program. We find that employee wages begin to deteriorate one year prior to...

I propose a neoclassical production economy with costly external financing, partial investment irreversibility, and endogenous investment/financing decisions to rationalize and quantify the well-documented interaction between the book-to-market equity effect and the financial leverage effect in...

Modern institutes of the market form new factors of the global economy. Stock exchanges, other institutes of the investment market, financial Internet communications create the integrated pace of world economic system. The companies test direct influence from global information-financial space....

Leverage cross sections more than a few years apart differ markedly, with similarities evaporating as the time between cross sections lengthens. Many firms have high and low leverage at different times, but few keep debt-to-assets ratios consistently above 0.500. Capital-structure stability is...

We study how interactions between financing and investment decisions can shape firm boundaries in dynamic product markets. In particular, we model a new product market opportunity as a growth option and ask whether it is best exploited by a large incumbent firm (Integration) or by a separate,...

This study is undertaken to discover the factors determining the capital structure decision of non-financial Pakistani firms. The effect of firm's profitability, liquidity, size, tangibility and non-debt tax shield on capital structure decision of ten non-financial firms operating at Pakistan...

This paper provides a compact summary of the evidence on capital structure instability and a case-based exploratory investigation of sources of such instability. Substantial instability in capital structure is the norm at publicly held nonfinancial firms. Firm-specific episodes of leverage...