Leverage Dynamics without Commitment
نویسندگان
چکیده
We characterize equilibrium leverage dynamics in a trade-off model which the firm can continuously adjust and cannot commit to policy ex ante. While ratchet effect leads shareholders issue debt gradually over time, asset growth maturity cause mean-revert slowly toward target. Investors anticipate future issuance raise credit spreads, fully offsetting tax benefits of new debt. Shareholders are therefore indifferent structure, even though their choice significantly affects levels, speed adjustment, investment, growth.
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ژورنال
عنوان ژورنال: Journal of Finance
سال: 2021
ISSN: ['0022-1082', '1540-6261']
DOI: https://doi.org/10.1111/jofi.13001