Contrary to the central predictions of signaling models, changes in profits do not empirically follow changes in dividends, and firms with the least need to signal pay the bulk of dividends. We show both theoretically and empirically that dividends signal safer, rather than higher, future...

In a financial contracting model, we study the optimal debt structure to resolve financial distress. We show that a debt structure where two distinct debt classes co-exist - one class fully concentrated and with control rights upon default, the other dispersed and without control rights -...

We present a model of sovereign debt in which, contrary to conventional wisdom, government defaults are costly because they destroy the balance sheets of domestic banks. In our model, better financial institutions allow banks to be more leveraged, thereby making them more vulnerable to sovereign...

Purpose - The paper aims to present an exchange ratio for merging companies that incorporates the change in the level of riskiness. Design/methodology/approach - The paper is a theoretical one. Its main objective has been achieved exploiting standard modern finance results such as Capital Asset...

Purpose - The paper aims to present an exchange ratio for merging companies that incorporates the change in the level of riskiness. Design/methodology/approach - The paper is a theoretical one. Its main objective has been achieved exploiting standard modern finance results such as Capital Asset...