This paper examines how good borrowers use the design of performance sensitive debt contracts to alleviate financial constraints. I show that borrowers use a convex pricing grid (i.e., a contract where the increase in the loan spread following a decline in performance exceeds the decrease in the...

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...

Whether to invest in process development that can reduce the unit cost and thereby raise future profits or to conserve cash and reduce the likelihood of bankruptcy is a key concern faced by many startups firms that have taken on debt. We explore this concern by examining the production quantity...

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...

In this paper, we discuss capital commitments from different sources of finance that are used in several key countries worldwide to finance clean technologies (CT). In the course of our analysis, we first elaborate on findings from literature that address the importance and implications 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...