We build a simple dynamic structural model of the firm, with state variable being earnings. It can address general empirical levels of investment, dividends, equity issuance in distress, leverage, debt duration, and liquidation/bankruptcy. Firms with very low leverage carry a substantial...

In leveraged loan deals, lead banks use bookbuilding to extract pricerelevant information from syndicate participants. This paper examines the content of such information. We find that pricing adjustments during bookbuilding are highly informative, not only about investors' required risk premium...

The Paris Agreement signals increased climate awareness and potential changes in the business environment as an economy decarbonizes. Ratification of the Paris Agreement could heighten climate-related transition risks, especially for companies in high-emitting industries. This research analyzes...

Capital structure plays a significant role in the determination of the value of the firm. The literature is replete with studies that relate to mature capitalist economies in the western world. When the models are applied to less-structured countries of the Middle East, one would question...

One of the most important discussions in economic research is about how to provide the right incentives to individuals. Usually when a regulator defines a rule, it has to deal with some tradeoff. This paper proposes to study a specific trade-off that emerges with the possibility of reversal of...

This paper derives the optimal financial contract when a borrowing entrepreneur can evade taxes in a model of costly state verification. In contrast to previous literature on costly state verification and financial contracting, we find that standard debt contracts are not optimal when tax...

I provide novel evidence that institutional investors, by influencing the maturity structure of corporate debt, play an active monitoring role. First, I find that institutional ownership is positively related to short-term debt and this relationship is not only statistically significant, but...

We present the puzzling evidence that, from 1962 to 2009, an average 10.2% of large public nonfinancial US firms have zero debt and almost 22% have less than 5% book leverage ratio. Zero-leverage behavior is a persistent phenomenon. Dividend-paying zero-leverage firms pay substantially higher...

In this paper we address the magnitude of debt-related tax shields employing a proprietary data set of 56 German leveraged buyouts (LBOs) completed between 1997 and 2011. In particular we examine the relevance and performance contribution of tax shields under different financing policies, and...

I examine the relation between managerial ownership and the maturity structure of corporate public debt by using a sample of newly issued Japanese corporate bonds. Firms with higher managerial ownership issue shorter maturity bonds. In addition, firms with higher managerial ownership have lower...