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 even if the new debt is junior and would reduce firm value …. These asymmetric forces in leverage adjustments, which we call the leverage ratchet effect, cause equilibrium leverage …

financial instruments used. Some are consistent with existing theory, while others are understudied. Many leverage changes are …). This implies a lower frequency of proactive leverage adjustments than indicated by prior research using accounting data …

part because of difficulties in constructing an effective proxy for the firm's tax benefit of debt. We examine leverage … decisions across taxable and nontaxable real estate firms — firms for which we can measure the relative tax benefit of debt with … little error. The tax hypothesis implies that for firms with similar asset portfolios, taxable firms should have more debt …

The literature on market timing of long-term debt issuance yields mixed evidence that managers can successfully time … their debt-maturity issuance. The early results that are indicative of debt-maturity timing are not robust to accounting for … structural breaks or to other measures of debt maturity from firm-level data that account for call and put provisions in debt …