We investigate the stakeholder theory of capital structure from the perspective of a firm's relationships with its employees. We find that firms that treat their employees fairly (as measured by high employee-friendly ratings) maintain low debt ratios. This result is robust to a variety of model...

We investigate the role of firms' country of origin in financial leverage decisions using data on foreign joint ventures in China. We hypothesize that national culture enters the joint optimization process leading to foreign joint ventures' leverage decisions and that it affects leverage...

I provide further evidence on the determinants of corporate capital structure by estimating a dynamic trade-off model of the firm that includes investment, leverage, and payout decisions. The structural model generates a leverage ratio that oscillates around a long-run, time-invariant level and...

In this paper we investigate the effects of debt usage on (risk-adjusted) equity returns in private equity-backed buyout transactions. We use a proprietary data set of more than 700 realized European and North American buyouts acquired between 1990 and 2006 to empirically assess theoretical...

The pecking order theory of corporate capital structure states that firms finance deficits with internal resources when possible. If internal funds are inadequate, firms obtain external debt. External equity is the last resort. Some financing patterns in the data are consistent with pecking...

This paper disproves that the second proposition by Modigliani and Miller (1958), which states that the yield of a firm is an increasing function of the debt/equity ratio. If that proposition were valid, all firms should borrow unlimitedly. This paper points out how M&M manipulated the...

This study tests the validity of the pecking order theory at different investment levels for manufacturing firms listed on the Borsa Istanbul. The study covers the period from 2000 to 2018, and the quantile regression method was employed to determine the relative importance of internal and...

When a nation can finance its investments via foreign-currency denominated debt or domestic-currency claims, what is the optimal capital structure of the nation? Building on the functions of fiat money as both medium of exchange, and store of value like corporate equity, our model connects...

This paper examines the timing behaviour of firms in the UK. We estimate intrinsic value of firms' equities and find that managers do indeed time security issue which leads them to deviate away from target leverage levels. We further find that equity mispricing influences issue decisions as well...