The purpose of this paper is to investigate the stochastic behavior of corporate debt ratios utilizing a balanced panel of 2,556 publicly traded US firms during the period 1997 - 2010. We partition the panel into ten economic sectors and perform panel unit root tests on each sector employing...

The main objective of this paper is to present the results of empirical studies on net profit distribution in companies using state-owned enterprises against payment. The main research hypothesis states that the majority of companies using state-owned enterprises against payment waive their...

The inverse relation between leverage and profitability is widely regarded as a serious defect of the tradeoff theory. We show that the defect is not with the theory but with the use of a leverage ratio in which profitability affects both the numerator and the denominator. Profitability directly...

This paper aims to clarify how contingent convertible bond (CCB) as a debt financing instrument affects the firm's investment policy, agency cost of debt and capital structure. We consider two different conversion thresholds of CCB: One is endogenous and the other is exogenous. We find that...

Since debt is typically riskier in recessions, transfers from equity holders to debt holders associated with each investment also tend to concentrate in recessions. Such systematic risk exposure of debt overhang has important implications for the investment and financing decisions of firms and...