We examine the joint optimization of financial leverage and irreversible capacity investment in a real options framework with risky debt and endogenous interest costs. Higher capacity, ceteris paribus, increases operating leverage and default probability, but lowers ex post adjustment costs and...

Purpose: The main objective of this study is to examine whether firms follow the financing hierarchy as suggested by the Pecking Order Theory (hereinafter POT). The External Funds Needed (hereinafter EFN) Model offers a financing hierarchy that can be used for examining the POT. As far as the...

When a nation can finance its investments via foreign-currency denominated debt or domestic-currency claims, what is the optimal capital structure of the nation? Building on the functions of fiat money as both medium of exchange, and store of value like corporate equity, our model connects...

This paper utilises a cross section of 12,244 publicly traded corporations in the U.S. from the time period 1999 to 2009 to test the pecking order theory of capital structure. Applying the methodology of Frank and Goyal (2003), limited evidence to support pecking order theory is found....

The "average" firm in the market of United Kingdom has changed its leverage ratio dramatically in the last three decades, following some patterns which apparently cannot be explained by applying simplistic methods. In this paper we try to shed some light in the main stream of the Capital...

Synopse aus "Interest Barrier and Capital Structure Response", "Relevanz der deutschen Zinsschranke für Einzelunternehmer und Personengesellschaften - eine dynamische Analyse der Betroffenheit" und "Relevanz der Zinsschranke - eine empirische Untersuchung der betroffenen Unternehmen von 2008...

To protect retail investors from the bail-in rule, we propose that banks should issue subordinated "contractual bail-in instruments", as defined in the BRRD, for an amount (together with Tier1 capital) at least equal to 8% of their liabilities. We support our argument by means of a theoretical...

Most of the research about capital structure is focused towards two theories: trade off theory (TOT) and pecking order theory (POT). The idea is to explore which theory works better in certain conditions and identify the key determinants that affect the capital structure of the company. However,...