We empirically examine how corporate cash holdings relate to debt structure, that is, the fraction of bond financing. We find that the relation between cash holdings and bond financing is U-shaped in the cross-section of firms. That is, firms that do not use bond financing or those that are...

We show that the mixed evidence on how financial leverage affects stock returns can be reconciled by accounting for firms' debt maturity structures. In our model, firms jointly optimize leverage and debt maturity by balancing benefits and rollover risk of short-term relative to long-term debt....

We empirically study non-traded bonds (NTB). We show that NTB offerings are driven by a firm-demand channel: firms issue NTB in expectation of future demand for deleveraging. NTB offerings therefore predict firms' future deleveraging activity, which happens through repurchasing NTB. We establish...

We analyze the impact of the introduction of credit default swaps (CDS) on real decision making within the firm, taking into consideration differences in firms' local economic and legal environments. We extend the model of Bolton and Oehmke (2011) to take into account uncertainty whether the...

We analyze the impact of the introduction of credit default swaps (CDS) on real decision making within the firm, taking into consideration differences in firms' local economic and legal environments. We extend the model of Bolton and Oehmke (2011) to take into account uncertainty whether the...