Why do small firms sell at lower multiples of earnings than large firms? Are small firms being consistently undervalued or is there some other rational explanation? We develop a rationale why valuing the smaller firm is not the same as valuing a smaller scaled, large firm in much the same way...

We examine the impact of state laws on capital structure for a sample of U.S. manufacturing firms. Firms incorporated in states with stronger payout restrictions use less debt, while antitakeover statutes do not significantly reduce long-run leverage. Correcting for the endogenously determined...