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제목 On Target Debt Ratios(Unyong Pyo,Yong-Jae Shin, Howard E. Thompson)
작성자 관리자 조회수 4732 작성일 2009.06.09
We show how target debt ratios can improve the investment incentives in firms with risky debt outstanding and with asymmetric information. While profitable investments in a firm with risky debt and/or asymmetric information can reduce the value of existing equity, new debt offsets the value loss to old shareholders. Since financing a part of investments with new debt set by target debt ratios offsets wealth transfer effects, firms will not pass up valuable investment opportunities and will make the optimal investment decisions. For the effectiveness of target debt ratios, the new debt can be issued with shelf registration and can maintain the same priority as in the old debt.
첨부파일 첨부파일 [Unyong Pyo,Yong-Jae Shin,Howard E. Thompson].pdf