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unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers …-intensive and financially constrained firms. We estimate the ex ante, indirect costs of financial distress due to unemployment risk …
Persistent link: https://www.econbiz.de/10012940594
The “low risk anomaly” refers to the empirical pattern that apparently high-risk equities do not earn commensurately … high returns. In this paper, we consider the possibility that the risk anomaly represents mispricing, not a … misspecification of risk, and develop the implications for corporate capital structure. The risk anomaly generates a simple tradeoff …
Persistent link: https://www.econbiz.de/10013026427
We develop a dynamic investment options framework with optimal capital structure and analyze the effect of debt maturity. We find that in the absence of financing constraints short-term debt maximizes firm value. In contrast with most literature results, in the absence of constraints, higher...
Persistent link: https://www.econbiz.de/10011716006
Modern institutes of the market form new factors of the global economy. Stock exchanges, other institutes of the investment market, financial Internet communications create the integrated pace of world economic system. The companies test direct influence from global information-financial space....
Persistent link: https://www.econbiz.de/10013125994
far as US corporations are concerned. In contrast to traditional corporate finance theory, our model indicates that the … globally with business risk. We highlight that a CoCo with a full principal write-down feature would cause serious …
Persistent link: https://www.econbiz.de/10013028117
We examine interactions between investment and financing decisions in a dynamic model where the firm can alter the mix of debt and equity financing and exercise a randomly arriving and potentially short lived growth option. The firm will typically finance the exercise of the growth option with...
Persistent link: https://www.econbiz.de/10013008584
This paper describes an equilibrium macro finance model where contracts are the mechanism by which differentially risk …-investment decisions generating operating income and operating risk) and (financial decisions generating financial risk); and 2 no … constrained managers of the representative firm make production-investment decisions that conform to the risk aversion of …
Persistent link: https://www.econbiz.de/10012986542
This paper describes a parsimonious macro-finance model where contracts are the mechanism by which differentially risk … in risk aversion or perception of risk changes the market valuations of their securities and has the representative firm … adjustment is designed to offset any risk shifting effects on the market valuation of bonds. The model set-up includes 2 …
Persistent link: https://www.econbiz.de/10012888831
model separate into bondholders and stockholders based on differences in risk aversion that creates a conflict of interest … (investment decisions generating operating income and risk, and financing decisions generating financial risk); and 2 no … set-up it is optimal for the contract constrained manager to make investment decisions that conform to the risk aversion …
Persistent link: https://www.econbiz.de/10012924736
and financing decisions characterize business cycles. The conflict of interest problem between the differentially risk … conforming to the risk aversion of stockholders (as reflected in stock valuations), and then make financing decisions to offset … any risk shifting between bondholders and stockholders resulting from the production/investment decision. In this way the …
Persistent link: https://www.econbiz.de/10012870576