This study investigates the effects of political uncertainty (PU) on corporate debt maturity and leverage using a novel measure of firm-specific PU. We find that PU is negatively associated with debt maturity and leverage. Furthermore, the negative effects of PU on debt maturity and leverage are...

Recent empirical studies find that options trading enhances firm value by allowing for a more efficient allocation of firm resources. In this paper, we develop and test the hypothesis that, in addition to a more efficient allocation of firm resources, options trading also enhances firm value...

This research investigates the fundamental components of corporate credit spreads through an integrated examination of how well different models, default probability functions, and market factors explain CDS prices. Individual company yield spreads are discovered to be determined by the...

This article empirically shows that the cost of new debt is higher for firms that commit covenant violations. Using a proxy for product market competition to capture exogenous changes to a firm's competitive environment, I find that the cost is systematically higher for firms that operate in...

How do firms manage debt maturity in the presence of investment opportunities? I document empirically that US corporations lengthen their average maturity of debt when output and investment rates are larger. To explain these findings, I construct an economic model where firms dynamically choose...

This paper investigates whether firm managers time debt issuances according to market liquidity conditions. Using transactions data in the U.S. market from July 2002 to December 2009, our results show that both the moment and volume of debt issuance are significantly associated with periods of...

This note revisits the valuation of the tax shield of corporate borrowing when borrowing is not linked to enterprise value. In this case past literature has typically discounted the tax shield at the cost of borrowed capital gross of corporate tax, not net of corporate tax. Yet the latter often...

We study the implications of longevity shocks for corporate bond markets, corporate debt financing and investment through the lens of life insurers. Longevity shocks shift life insurers' demand for bonds of specific maturities. When longevity increases, life insurance companies increase their...

We are concerned with the valuation of the finite horizon corporate debt under Chapter 11 of the U.S. bankruptcy code. Broadie and Kaya (2007) set up a binomial model by assuming that determining the bankruptcy boundary is restricted to be at initial time. We distinguish the so-called bankruptcy...

We investigate equilibrium debt dynamics for a firm that cannot commit to a future debt policy and is subject to a fixed restructuring cost. We formally characterize equilibria when the firm is not required to repurchase outstanding debt prior to issuing additional debt. For realistic values of...