setting. In an environment without taxes and bankruptcy costs, the results are generally consistent with Modigliani and Miller … assumptions about either taxes or bankruptcy costs leads to conclusions that are generally different from those in Modigliani and … with the subjective discount factor of the firm's manager if there are taxes and bankruptcy costs. The empirical analysis …

We show that set-up costs are a key determinant of the capital structure of young firms. Theoretically, when firms face … high set-up costs, they can only be established by leveraging up and lengthening debt maturity. Empirically, we use a large …