The tax bias in favour of debt finance under the corporate income tax means that corporate debt ratios exceed the socially optimal level. This creates a rationale for thin-capitalization rules limiting the amount of debt that qualifies for interest deductibility. This paper sets up a model of...

This study examines the role of corporate social responsibility (CSR) activities in a firm’s debt and equity financing decisions. We also examine the effects of CSR on the deb-equity choice for financially constrained and non-constrained firms. We find that high CSR firms tend to use more debt...

This article provides an introductory, yet comprehensive, business cycle analysis of firm financing. Using data from Compustat, we find that debt issuance is procyclical while the net sale of stock is countercyclical. However, an equity financing measure that includes stock compensation and...