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Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2013

Firms' inability to commit to future funding choices has profound consequences for capital structure dynamics. With debt in place, shareholders pervasively resist leverage reductions no matter how much such reductions may enhance firm value. Shareholders would instead choose to increase leverage...

Persistent link: https://www.econbiz.de/10010205870

The (self-)funding of intangibles

Döttling, Robin; Ladika, Tomislav; Perotti, Enrico C. - 2016

In response to technological change, U.S. corporations have been investing more in intangible capital. This transformation is empirically associated with lower leverage and greater cash holdings, and commonly explained as a precautionary response to reduced debt capacity. We model how firms'...

Persistent link: https://www.econbiz.de/10011556238

Size matters : "over"investments in a relational contracting setting

Englmaier, Florian; Fahn, Matthias - 2015

The corporate finance literature documents that managers tend to overinvest into physical assets. A number of theoretical contributions have aimed to explain this stylized fact, most of them focussing on a fundamental agency problem between shareholders and managers. The present paper shows that...

Persistent link: https://www.econbiz.de/10011285326

Size matters : "over"investments in a relational contracting setting

Englmaier, Florian; Fahn, Matthias - 2018

The corporate finance literature documents that managers tend to over-invest in their companies. A number of theoretical contributions have aimed at explaining this stylized fact, most of them focusing on a fundamental agency problem between shareholders and managers. The present paper shows...

Persistent link: https://www.econbiz.de/10011895831

Nonlinear modeling of target leverage with latent determinant variables : new evidence on the trade-off theory

Sabiwalsky, Ralf (contributor) - 2008

The trade-off theory on capital structure is tested by modelling the capital structure target as the solution to a … determinants. In contrast, the framework applied here allows for a direct test: results confirm the trade-off theory for small and … medium-sized firms, but not for large firms. -- Capital structure ; nonlinear ; latent variables ; trade-off theory …

Persistent link: https://www.econbiz.de/10003770815

Heterogeneous tax sensitivity of firm-level investments

Egger, Peter; Erhardt, Katharina; Keuschnigg, Christian - 2014

Firms are heterogeneous in size, productivity, ownership concentration, governance, financial structure and other dimensions. This paper introduces a stylized theoretical framework to account for such differences and to explain the heterogeneous tax sensitivity of firm-level investments across...

Persistent link: https://www.econbiz.de/10010412040

Systematic risk, debt maturity and the term structure of credit spreads

Chen, Hui; Xu, Yu; Yang, Jun - 2012

We build a dynamic capital structure model to study the link between systematic risk exposure and debt maturity, as well as their joint impact on the term structure of credit spreads. Our model allows for time variation and lumpiness in the maturity structure. Relative to short-term debt,...

Persistent link: https://www.econbiz.de/10009583690

Empirical Test of Pecking Order Theory for the US Listed Firms

Abdullazade, Zaur - 2020

This paper is aimed at examining the appropriateness of pecking order theory in the US financial market. One of the … most popular models of firm's capital structure driven by asymmetric information is the pecking order theory (POT) of Myers …

Persistent link: https://www.econbiz.de/10012836138

Competition and R&D Financing : Evidence from the Biopharmaceutical Industry

Thakor, Richard T. - 2018

What is the interaction between competition, R&D investments, and the financing choices of R&D-intensive firms? Motivated by existing theories, we hypothesize that as competition increases, R&D-intensive firms will: (1) increase R&D investment relative to assets-in-place that support existing...

Persistent link: https://www.econbiz.de/10012937531

Competition and R&D Financing : Evidence from the Biopharmaceutical Industry

Thakor, Richard T.; Lo, Andrew W. - 2021

The interaction between product market competition, R&D investment, and the financing choices of R&D-intensive firms on the development of innovative products is only partially understood. To motivate empirical hypotheses about this interaction, we develop a model which predicts that as...

Persistent link: https://www.econbiz.de/10013249274

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