We show that while firms that typically pay dividends already have high ratios of retained-earnings-to-total-equity (RE/TE) and high propensities to pay (PTP) early on, firms that typically do not pay dividends have persistently low RE/TE and low PTP even after 20 years of growth. This...

We identify a firm's growth type by its valuation volatility which proxies for the extent to which asymmetric information arises from growth opportunities rather than from assets-in-place. We show that firm investment style (measured by R&D/[Capex R&D]) is persistent and positively aligned with...

We find that growth type (identified by a two-way sort on firm initial market-to-book ratio and asset tangibility) can parsimoniously predict significantly dispersed and persistently distinct future leverage ratios. Growth type is persistent; growth-type-sorted cross-sections of corporate...

Recent research has revealed a persistent cross-sectional pattern for leverage ratios. This paper argues that growth type captures important differences in market imperfections across firms. We show that growth type, largely revealed early on, parsimoniously explains the persistent dispersion in...

We find the investment-cash-flow-sensitivity (ICFS) decreases with a firm's asymmetric informational imperfection about growth (AI), a variable highly persistent over time. Firms with distinctly initial AI have distinct future investment styles and financing patterns. Higher initial AI predicts...

When predicting future leverage ratios, the explanatory power of initial residual leverage falls quickly over time, while initial standard leverage determinants retain much of their explanatory power. To make sense of this fundamental persistence, we show that growth-type (identified by a...

Recent research has found a positive relationship between firm propensity to pay (PTP) and retained-earnings-to-total-equity ratio (RE/TE). Motivated by a lifecycle theory of dividends, researchers have interpreted RE/TE as a proxy for firm maturity stage. This paper shows that the RE/TE ratios...

Recent research has revealed a persistent cross-sectional pattern in leverage ratios but found it difficult to explain. We show that growth-type (largely revealed early on) can parsimoniously explain the persistent dispersion in leverage. Using a two-way independent sort on firm initial...