lack of diversification, are simultaneously and endogenously determined. We first derive the key implications of our theory … earnings (controlling for the risk-neutral drift) are key implications of our theory that arise from the incorporation of …

ofthis theory of capital structure evolution is that optimal capital structure is essentiallydynamic, and depends on the firm …’s stock price, implying that firms issue equity when stockprices are high and debt when stock prices are low. The theory … testablepredictions. Moreover, the theory can rationalize the use of debt in the absence of taxes,agency costs or signaling considerations. …

negative relation between profitability and financial leverage that is thought to be inconsistent with the trade-off theory …

A theory of capital structure in which costs associated with asymmetric information are the sole friction is used to … present a new perspective on the standard pecking order theory. In the model, both the amount of debt and the restrictiveness …

We present a tradeoff theory of capital structure in which costs associated with asymmetric information are the sole …

We propose a theory of optimal firm financing given nested information problems of adverse selection and agency cost …