This paper documents the role of capital markets in financing nonfinancial French firms since the adoption of the euro and analyzes its implications for risk using a structural model of credit risk. The analysis suggests that market financing has played a more important role in financing French...

This paper studies whether debt renegotiation mitigates debt overhang and improves investment efficiency. Using mergers between lenders participated in the same syndicated loans as natural experiments that exogenously reduce the number of lenders and thus make renegotiation easier, I find that...

Average leverage is often used as a measure of risk. However, average leverage in a limited liability context should not be computed as a simple arithmetic average of the underlying constituents. In fact, using a simple arithmetic average can give misleading results. For example, the simple...

I explain the standard carried interest contract as a mechanism to induce incentive compatible fund leverage while also satisfying LP return objectives. Fee, leverage and target return data from private equity real estate (PERE) funds are used to calibrate the model. Steps in the modeling...

Productive firms can access credit markets directly by issuing corporate bonds or by borrowing through financial intermediaries. In this paper, we study the cyclical properties of corporate credit provision through these two types of debt instruments in major advanced economies. We argue that...

This paper investigates how conventional monetary policy shocks influence corporate financing decisions. We find that low-risk firms (i.e., firms with low debt burdens) respond more positively in increasing leverage ratios when the Federal Open Market Committee cuts interest rates. These firms...

Using data on balance sheets of both financial and nonfinancial sectors of the economy, we use a "demand system" approach to study how lender composition and willingness to provide credit affect the relationship between credit expansions and real activity. A key advantage of jointly modeling the...

We investigate the leverage of hedge funds using both time-series and cross-sectional analysis. Hedge fund leverage is counter-cyclical to the leverage of listed financial intermediaries and decreases prior to the start of the financial crisis in mid-2007. Hedge fund leverage is lowest in early...

Traditional variable annuities build retirement income for annuitants through investments in stocks and bonds. These annuities are variable because their performance depends upon the performance of uncertain financial markets. The risk of poor performance lies solely upon annuitants, rather than...

This article aims to analyze the evolution of private equity over the last decade in terms of valuation (asset prices), determinants of private equity returns and the role that leverage and corporate governance plays in the success of private equity. The years 2005-2007 were characterized by a...