We estimate the debt capacity of a firm as the critical debt ratio that causes a downgrade in creditworthiness. Unused debt capacities depict the temporal access to external debt funds and measure a firm's financial flexibility. Firms with high unused debt capacities realize a larger fraction of...

We estimate the debt capacity of a firm as the critical debt ratio that causes a downgrade in creditworthiness. Unused debt capacities depict the temporal access to external debt funds and measure a firm's financial flexibility. Firms with high unused debt capacities realize a larger fraction of...