In an efficient market, spreads will reflect both the issuer’s current risk and investors’ expectations about how that risk might change over time. Collin-Dufresne and Goldstein (<xref>2001</xref>) show analytically that a firm’s expected future leverage importantly influences the spread on its bonds....

We find that equity mispricing impacts the speed at which firms adjust to their target leverage (TL) and does so in predictable ways depending on whether the firm is over- or underlevered. For example, firms that are above their TL and should therefore issue equity (or retire debt) adjust more...

We evaluate motives for share repurchases using a unified framework where a firm has a target capital structure and has equity that can be mispriced. We document that capital structure adjustments are a value-increasing motive for repurchases and that the extent to which adjusting capital...

Many authors relate a firm's performance to legal and political features and the regulatory environment in which it operates. This article compares firms' capital structure adjustments across countries and investigates whether institutional differences help explain the variance in estimated...

This paper examines international differences in banks' capital structure adjustments across a large panel of 94 countries over the period 1993 to 2007. A bank's ability to adjust its capital ratio is influenced by corporate governance, public policy, market structure, and bank regulatory...