G2TT
来源类型Working Paper
规范类型报告
DOI10.3386/w21548
来源IDWorking Paper 21548
Optimal Debt and Profitability in the Tradeoff Theory
Andrew B. Abel
发表日期2015-09-14
出版年2015
语种英语
摘要I develop a dynamic model of leverage with tax deductible interest and an endogenous cost of default. The interest rate includes a premium to compensate lenders for expected losses in default. A borrowing constraint is generated by lenders’ unwillingness to lend an amount that would trigger immediate default. When the borrowing constraint is not binding, the tradeoff theory of debt holds: optimal debt equates the marginal tax shield and the marginal expected cost of default. Contrary to conventional interpretation, but consistent with empirical findings, increases in current or future profitability reduce the optimal leverage ratio when the tradeoff theory holds.
主题Financial Economics ; Corporate Finance
URLhttps://www.nber.org/papers/w21548
来源智库National Bureau of Economic Research (United States)
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资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/579223
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GB/T 7714
Andrew B. Abel. Optimal Debt and Profitability in the Tradeoff Theory. 2015.
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