To fulfill their growth aspirations, entrepreneurial ventures depend on shortterm, liquid sources of debt financing such as bank loans. However, because of the twin problems of information asymmetry and moral hazard, banks make their lending decisions by considering the venture’s creditworthiness score provided by private information exchanges. Using theoretical arguments grounded in venture fi...

While one may quibble with the notion that the decision to sell debt through the negotiated or competitive process is “the most important decision an issuer can make,” this issue clearly represents one of the most controversial topics in public finance today. The controversy extends back to the mid-1970s, when more and more issuers began to select the negotiated method as the preferred way of s...

This article identifies an important channel through which excess control rights affect firm value. Using a new, hand-collected data set on corporate ownership and control of 3,468 firms in 22 countries during the 1996–2008 period, we find that the cost of debt financing is significantly higher for companies with a wider divergence between the largest ultimate owner’s control rights and cash-fl...

A rapidly growing literature on the financing of distressed companies finds that troubled firms often secure relief from stress through asset restructuring, capital restructuring, or both. However, none of the earlier corporate distress restructuring studies have focused on the centrally important commercial banking industry which has been one of the most financially distressed industries of th...

In this paper, we build on a single product, finite horizon, periodic review inventory management setting and include key financial aspects such as working capital constraints, payment delays and multiple sources of financing. We numerically solve for the optimal working capital target and the order-up-to level using an embedded Nelder and Mead optimization, and we perform sensitivity analysis ...

commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for financing working capital and meeting short-term liabilities. it is one of the most important financial instruments that constitute a significant portion of issued debt securities in financial markets. nevertheless, commercial paper, like many other conventional financial instruments, has been st...

This paper studies the impact of cross-country variation in financial market development on firms’ financing choices and growth rates using comprehensive firm-level datasets. We document that in less financially developed economies, small firms grow faster and have lower debt to asset ratios than large firms. We then develop a quantitative model where financial frictions drive firm growth and d...

In this paper we examine an optimal investment policy of the firm that is financed by issuing equity and debt. Recently, a number of researchers have studied the interaction among firm’s investment and financing decisions under uncertainty by means of real option framework. In the literature, investment problems for a firm with growth options, that is financed with equity and debt are investiga...

We test whether equity overvaluation affects corporate financing decisions using an ex ante misvaluation measure that filters firm scale and growth prospects from market price. We find that equity issuance and total financing by firms increase with equity overvaluation; but only among overvalued stocks. Also consistent with behavioral theories, we find that the sensitivity of equity issuance to...