This study enhances the growing research field of Cultural Finance by analyzing the relationship between cultural value types – in particular Autonomy and Embeddedness – and the corporate debt choice of either bank or bond financing. We derive our hypotheses from a slight modification and...

This paper investigates the effect of capital structure on a firm's choice between vertical integration and outsourcing. We model the production decision in a Principal-Agent framework and show that suppliers use debt as a strategic instrument to collect the surplus from outsourcing as their...

This paper investigates whether firm managers time debt issuances according to market liquidity conditions. Using transactions data in the U.S. market from July 2002 to December 2009, our results show that both the moment and volume of debt issuance are significantly associated with periods of...

This paper investigates the effect of capital structure on a firm's choice between vertical integration and outsourcing. We model the production decision in a Principal-Agent framework and show that suppliers use debt as a strategic instrument to collect the surplus from outsourcing as their...

This paper investigates the relationship between the borrowing firm's cross-ownership and its choice between bank loans and public bonds when raising new debt capital. We find that cross-ownership significantly reduces the firm's use of bank loans when making debt issuance decisions. Evidence...

Systemically important banks are subject to at least two departures from the neutrality of debt versus equity financing: the tax deductibility of interest payments and implicit funding subsidies. This paper fills a gap in the literature by comparing their mechanism and interaction within a...

We analyze the effect of investor level taxes, firm-specific ownership structure and firm-specific payout policy on firms' capital structure choice. Our analysis is based on data for 10,983 firms from 13 Central and Eastern European (CEE) countries over the time period 2002-2012. Our results...

We examine firms' simultaneous choice of investment, debt financing and liquidity in a large sample of US corporates between 1980 and 2014. We partition the sample according to the firms' financial constraints and their needs to hedge against future shortfalls in operating income. In contrast to...

We model the joint effects of debt maturity and cash holdings on default risk. When firms have short-term debt outstanding, negative cash flow shocks lead to a drop in liquid reserves and may cause firms to suffer losses when rolling over their debt, due to weaker fundamentals. This mechanism...

We revisit the relation between equity returns and financial leverage through the lens of a trade-off model with costly capital structure rebalancing. The model provides a “lookalike” Modigliani-Miller equation that predicts that expected equity returns depend on whether a firm's leverage is...