target debt ratio for the underlying asset, the option delta, and the amount of risk-free borrowing or lending that would be … if the tradeoff theory holds and real options are important. We can rationalize some financing patterns that seem … inconsistent with the tradeoff theory, but a conclusive test of the theory seems nearly impossible with conventional empirical …

increase distress costs and thus may prompt firms to lower leverage and undertake risk-reducing but unprofitable investments …

the Hatch-Waxman Act as an exogenous shock to competition, we provide causal evidence which supports these hypotheses …

explaining the market timing phenomenon using the trade-off theory of capital structure. Our explanation relies on the balance … or agency costs or imperfect information. Finally, we empirically corroborate our theory …

develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the …

optimism and the negative effects of risk-sharing costs. Consistent with empirical evidence, long-term debt declines with … optimism, while short-term borrowing increases. Permanent and transitory risk components have contrasting effects. Long …-term debt increases with the intrinsic risk, but varies non-monotonically with the transient risk. Short-term borrowing declines …