Are Firms Underleveraged ? An Examination of The Effect of Leverage on Default Probabilities  

Oleh:

Molina, Carlos A.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 60 no. 3 (Jun. 2005), page 1427-1460.
Topik: FIRMS; tax benefits; leverage; studies; debt; effects; default; probability
Fulltext: p 1427.pdf (175.53KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

Lihat Detail Induk

Isi artikel

A commonly held view in corporate finance is that firms are less leveraged than they should be, given the potentially large tax benefits of debt. In this paper, I study the effect of firms' leverage on default probabilities as represented by the firms' ratings. Using an instrumental variable approach, I find that the leverage's effect on ratings is three times stronger than it is if the endogeneity of leverage is ignored. This stronger effect results in a higher impact of leverage on the ex ante costs of financial distress, which can offset the current estimates of the tax benefits of debt.

Opini Anda

Klik untuk menuliskan opini Anda tentang koleksi ini!

Kembali