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Information transparency of firm financing
Noël, Antoine L.; Sun, Amy Hongfei - 2021
We propose a theory of optimal firm financing given nested information problems of adverse selection and agency cost …
Persistent link: https://www.econbiz.de/10012547888
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Capital Structure Choice Under Asymmetric Information and Overconfident Managers
Ji, Xiehua - 2020
Traditional pecking-order theory (POT) cannot explain why good-quality firms issue equity: this is often considered to …
Persistent link: https://www.econbiz.de/10012849787
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Agency Costs, Information, and the Structure of Corporate Debt Covenants
Lowery, Richard - 2012
Private debt contracts tend to have covenants that restrict future investment, restrict capital structure decisions, or impose thresholds for cash flows or other performance measures. While previous studies have demonstrated a relationship between firm characteristics and the overall strictness...
Persistent link: https://www.econbiz.de/10013109048
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Asymmetric Information, Disagreement, and the Valuation of Debt and Equity
Banerjee, Snehal; Breon-Drish, Bradyn M.; Smith, Kevin - 2022
We study the prices of a firm's debt and equity in a market where investors have private information and may exhibit differences of opinion. We show how debt and equity valuations, and the impact of public information and distress risk on these valuations, depend upon disagreement and the...
Persistent link: https://www.econbiz.de/10014238266
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The pecking order of innovation finance
Mina, Andrea; Lahr, Henry - 2018
This paper examines the relationship between firms' innovation activities and the hierarchy of financing behaviours. We analyse the role of innovation inputs (R&D), intermediate outputs (patents) and outcomes (product and process innovations) as sources of information asymmetry in financing...
Persistent link: https://www.econbiz.de/10011919534
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Asymmetric information, dynamic debt issuance, and the term structure of credit spreads
Benzoni, Luca; Garlappi, Lorenzo; Goldstein, Robert S. - 2019
We propose a tractable model of a firm's dynamic debt and equity issuance policies in the presence of asymmetric information. Because "investment-grade" firms can access debt markets, managers who observe a bad private signal can both conceal this information and shield shareholders from...
Persistent link: https://www.econbiz.de/10012102903
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Economic Uncertainty, Aggregate Debt, and the Real Effects of Corporate Finance
Johnson, Timothy C. - 2018
This paper develops a tractable general equilibrium with endogenous firm capital structure decisions driven by changes in economic uncertainty. The model enables a critical assessment of standard paradigms of corporate finance in order to highlight empirically important directions for...
Persistent link: https://www.econbiz.de/10012935351
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Lo and Behold! Modigliani & Miller's Homemade Leverage Proof is a Fallacy
Dayala, Roger - 2013
This article challenges Modigliani & Miller's (M&M) Famous Homemade Leverage Proof. The M&M proof suggests that since in efficient markets any value impact from leverage results in a homemade arbitrage opportunity, leverage must be value neutral. However, through the uncontroversial notion of...
Persistent link: https://www.econbiz.de/10013085846
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Macroeconomic Conditions and the Puzzles of Credit Spreads and Capital Structure
Chen, Hui - 2009
I build a dynamic capital structure model that demonstrates how business-cycle variations in expected growth rates, economic uncertainty, and risk premia influence firms' financing and default policies. Countercyclical fluctuations in risk prices, default probabilities, and default losses arise...
Persistent link: https://www.econbiz.de/10013155971
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Capital Structure Choice, Information Asymmetry and Debt Capacity : Evidence from India
Komera, Surenderrao - 2016
We examine the relevance of the pecking order theory of capital structure among emerging market firms in the light of … that sample firms follow the pecking order while making their financing choices.We find that the pecking order theory fares … theory fails to explain sample firms' financing choices …
Persistent link: https://www.econbiz.de/10012980527