I develop a dynamic capital structure model in which shareholders determine a firm's leverage ratio, debt maturity, and default strategy. In my model, the firm's debt matures all at once. Therefore, after repaying the principal shareholders own all the firm's cash flows and can pick a new...

When firms roll over bonds of different maturity, their debt-maturity structure can feature both shorter and longer maturity in bad times. We link these debt-maturity patterns to the firms' fundamentals, assuming earnings are deterministically declining but the same firm is subject to a growth...

Previous studies on incremental financing compare a subset of reported bank loans to full samples of public debt and non-bank private debt. However, if reported loans are a non-representative subset of the loan universe, the analysis of incremental financing decisions should also consider...

I analyze both CEO inside debt and firm debt jointly to further investigate the compensation incentives on risky decision-making and the resulting financial policy decisions concerning the debt structure of the firm. I find larger firms with high CEO inside debt tend to diversify, as calculated...

We study the impact of the optimal debt and priority structure on corporate financing and investment decisions in a dynamic trade-off model, where a firm simultaneously issues bank and market debt. Private bank debt is renegotiable during financial distress; thus it avoids inefficient and costly...

Firms have trouble issuing new bonds during financial market meltdowns. However, an intriguing yet often overlooked fact is that many firms also engage in debt buybacks at the same time. In this paper, we build a dynamic model to study the incentives for equity holders to buy back the debt. The...

We find that institutional arrangements have an impact on the real economy by affecting firms' choice between private and public debt and the subsequent financing costs. Using new debt issued by firms in 26 non-US countries, we find, after controlling for firm characteristics predicted by debt...

I develop a dynamic model of financing decisions and optimal debt maturity choice in which creditors face adverse selection and learn about the firm's quality from news. In equilibrium, shareholders may choose to postpone debt issuance to reduce adverse selection and improve the pricing of newly...

I study the target leverage and partial adjustment activity of firms that issue convertible bonds. Convertibles may help target adjustment efforts by lowering issuance transaction costs and reducing interest expenses. Nevertheless, convertible debt can increase liabilities for an unknown amount...

Profitability is substantial for any firm to maintain business and enable long-term sustainability. Firms' decision on indebtedness and capital structure have influence on potentials for prosperity, growth, and development. This study aims to find a new empirical evidence on the influence of...