This paper suggests a two-stage methodology to classify firms as financially constrained or unconstrained. First, we develop a financial constraints model that objectively separates over 50% of all firms, and enables us to classify the remaining firms by using logit analysis. Our methodology...

This paper provides additional evidence on the role played by stock prices in explaining capital structure. Our results show that stock prices play an important role, but most of the previous determinants (such as investment, cash flow and the lagged debt ratio) are still crucial in the...