firms. Our objective is to test empirically the relevance of trade-off theory regards the debt funding behavior of business …

This paper explores the impact of risky asset holdings by U.S. nonfinancial firms. From the early 1990s to 2017, the … share of risky securities surged from 28% to over 40% of firms' financial assets. Using a business-cycle heterogeneous firms … asset holdings. The model predicts that firms with higher exposure to risky assets experience an investment decline up to 50 …