The authors compare the effects of the business cycle on the cost of capital faced by small, distressed firms and their larger, more financially secure counterparts. The analysis draws on stock market returns data for a broad range of traded companies during the 1963-91 period.

Recent years have seen the emergence of a sizable literature comparing the cost of capital in the United States and Japan. This review of the literature highlights the methodological differences of previous investigations and seeks to isolate common conclusions. Emphasis is given to underlying...

An analysis of a q model of investment in which financial structure affects firm value, using a perfect foresight model of general equilibrium that includes a debt-related agency cost; uses the comparative statics and dynamics of changing the corporate tax rate as an illustration.

An analysis of the corporate investment decision when financial structure has real effects, utilizing data for the U.S. manufacturing sector from 1954 to 1980.

uring the 1980s, the proportion of business assets financed by debt exceeded that of any other period since World War II. The characteristics of financial securities also changed, as junk bonds, variants of preferred stock, warrants, and other forms of mezzanine financing became more common in...

The composition of business investment in the United States changed dramatically during the 1980s. Workplaces were transformed as a result of investments in information processing equipment such as computers, fax machines, copiers, and sophisticated telephones. Businesses built new office towers...