This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such...

Firms with lower leverage are not only less likely to experience financial distress but are also better positioned to acquire assets from other distressed firms. With endogenous asset sales and values, each firm's debt choice then depends on the choices of its industry peers. With indivisible...

I explain the standard carried interest contract as a mechanism to induce incentive compatible fund leverage while also satisfying LP return objectives. Fee, leverage and target return data from private equity real estate (PERE) funds are used to calibrate the model. Steps in the modeling...

This paper examines the relation between financial leverage and firm performance for a panel of 159,375 (mostly private) non-financial firms in Thailand during the global financial crisis of 2007-2009. We find that leverage is negatively associated with firm performance in the full sample...

We study to what extent firms spread out their debt maturity dates across time, which we call "granularity of corporate debt." We consider the role of debt granularity using a simple model in which a firm's inability to roll over expiring debt causes inefficiencies, such as costly asset sales or...

Prior research shows that technology spillovers across firms increase innovation, productivity, and value. We study how firms finance their own growth stimulated by technology spillovers from their technological peer firms. We find that greater technology spillovers lead to higher leverage. This...

This research investigates the moderating effect of national governance quality on the corporate governance-capital structure decision relationship. Using an instrumental variable estimation technique to analyze a multinational dataset containing 23,142 firm-year observations of 3,270 firms in...

We use a dynamic model of cash management in which firms face competitive pressure to show that competition increases corporate cash holdings as well as the frequency and size of equity issues. In our model, these effects are driven by small, financially constrained firms, in contrast with the...

I demonstrate that the timing of vertical mergers is generally dependent on industry characteristics. My predictions are consistent with empirically observed patterns of vertical mergers. I show that merger activity during economic upturns tends to be motivated by operating efficiencies, while...

We develop a model of optimal capital structure in imperfectly competitive markets by focusing on a duopoly. The model endogenizes both financing and investment decisions of the firms. We show that in equilibrium the industry leader uses debt conservatively, while the follower uses debt more...