The Arab economies present a unique opportunity to test the tax model of capital structure. These economies may be dichotomized into taxable and non-taxable states. The results support a number of implications of the tax-based theories of capital structure. We document relatively higher leverage...

We study the capital structure reactions of firms that have been added to Standard & Poor's CreditWatch list in order to test the role of credit ratings in firm financial decisions. Survey evidence by Graham and Harvey (2001) indicates that CFOs consider credit ratings as the second most...

This paper revisits recent investigations into the role credit ratings play in the marginal financing behavior of firms. While it has long been documented that credit ratings may be an important determinant of firm capital structure policy, academics have only recently subjected this motivation...

We examine the impact of mispricing on capital expenditures, R&D, acquisitions, and asset sales. By decomposing the market-to-book ratio into mispricing and growth components, we show that corporate investments are linked to mispricing through market-timing and catering, after controlling for...

Existing studies of capital structure show a positive association between tangible assets and leverage, but these studies have ignored the potential systematic variation in magnitude due to institutional heterogeneity across countries. Using a sample from 32 countries, we find that the...