Debt maturity and the leverage ratcheting effect
Admati, Demarzo, Hellwig, and Pfleiderer (ADHP, 2018) note that static models of optimal leverage have assumed firms have no prior debt. In this case, the leverage that maximizes firm value also maximizes value to the initial equity owners. However, using a simple two-period model with zero coupon d...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Presses Universitaires de Grenoble
2019
|
| Subjects: | |
| Online Access: | View Fulltext in Publisher |