What Do Credit Markets Tell Us About the Speed of Leverage Adjustment?

Published Online:https://doi.org/10.1287/mnsc.2013.1871

References

  • Almeida H, Philippon T (2007) The risk-adjusted cost of financial distress J. Finance 62:2557–2586.CrossrefGoogle Scholar
  • Alti A (2006) How persistent is the impact of market timing on capital structure? J. Finance 61:1681–1710.CrossrefGoogle Scholar
  • Baker M, Wurgler J (2002) Market timing and capital structure. J. Finance 57:1–32.CrossrefGoogle Scholar
  • Bessembinder H, Kahle K, Maxwell W, Xu D (2009) Measuring abnormal bond performance. Rev. Financial Stud. 22:4219–4258.CrossrefGoogle Scholar
  • Bharath S, Shumway T (2008) Forecasting default with the Merton distance to default model. Rev. Financial Stud. 21:1339–1369.CrossrefGoogle Scholar
  • Bond S (2002) Dynamic panel data models: A guide to micro data methods and practice. Portuguese Econom. J. 1:141–162.CrossrefGoogle Scholar
  • Byoun S (2008) How and when do firms adjust their capital structures toward targets. J. Finance 63:3069–3096.CrossrefGoogle Scholar
  • Campbell J, Taksler G (2003) Equity volatility and corporate bond yields. J. Finance 58:2321–2349.CrossrefGoogle Scholar
  • Cao C, Yu F, Zhong Z (2010) The information content of option-implied volatility for credit default valuation. J. Financial Markets 13:321–343.CrossrefGoogle Scholar
  • Chang X, Dasgupta S (2006) Target behavior and financing: How conclusive is the evidence? Working paper, Hong Kong University of Science and Technology, Clear Water Bay.Google Scholar
  • Chang X, Dasgupta S (2009) Target behavior and financing: How conclusive is the evidence? J. Finance 64:1767–1796.CrossrefGoogle Scholar
  • Collin-Dufresne P, Goldstein R (2001) Do credit spreads reflect stationary leverage ratios? J. Finance 56:1929–1957.CrossrefGoogle Scholar
  • Collin-Dufresne P, Goldstein R, Martin JS (2001) The determinants of corporate credit spreads. J. Finance 56:2177–2207.CrossrefGoogle Scholar
  • Cremers M, Driessen J, Maenhout P, Weinbaum D (2008) Individual stock-option prices and credit spreads. J. Banking Finance 32:2706–2715.CrossrefGoogle Scholar
  • DeAngelo H, Roll R (2011) How stable are corporate capital structures? Working paper, University of Southern California, Los Angeles.CrossrefGoogle Scholar
  • Dick-Nielsen J (2009) Liquidity biases in TRACE. J. Fixed Income 19:43–55.CrossrefGoogle Scholar
  • Donaldson G (1961) Corporate debt capacity: A study of corporate debt policy and the determination of corporate debt capacity. Working paper, Harvard Business School, Boston.Google Scholar
  • Duarte J, Young L, Yu F (2007) Why does corporate governance explain credit spreads? Working paper, Rice University, Houston.Google Scholar
  • Duffee G (1998) The relation between Treasury yields and corporate bond yield spreads. J. Finance 53:2225–2241.CrossrefGoogle Scholar
  • Elton EJ, Gruber MJ, Agrawal D, Mann C (2001) Explaining the rate spread on corporate bonds. J. Finance 56:247–277.CrossrefGoogle Scholar
  • Ericsson J, Jacobs K, Oviedo R (2009) The determinants of credit default swap premia. J. Financial Quant. Anal. 44:109–132.CrossrefGoogle Scholar
  • Ericsson J, Reneby J, Wang H (2005) Can structural models price default risk? Evidence from bond and credit derivative markets. Working paper, McGill University, Montreal.CrossrefGoogle Scholar
  • Fama E, French K (1997) Industry cost of equity. J. Financial Econom. 43:153–193.CrossrefGoogle Scholar
  • Fama E, French K (2002) Testing trade-off and pecking order predictions about dividends and debt. Rev. Financial Stud. 15:1–33.CrossrefGoogle Scholar
  • Fama E, French K (2005) Financing decisions: Who issues stock. J. Financial Econom. 76:549–582.CrossrefGoogle Scholar
  • Faulkender M, Flannery M, Hankins K, Smith J (2012) Cash flows and leverage adjustments. J. Financial Econom. 103:632–646.CrossrefGoogle Scholar
  • Fischer E, Heinkel R, Zechner J (1989) Dynamic capital structure choice: Theory and tests. J. Finance 45:19–40.CrossrefGoogle Scholar
  • Flannery M, Hankins K (2012) Estimating dynamic panel models in corporate finance. J. Corporate Finance 19:1–19.CrossrefGoogle Scholar
  • Flannery M, Rangan K (2006) Partial adjustment toward target capital structures. J. Financial Econom. 79:469–506.CrossrefGoogle Scholar
  • Flannery M, Nikolova S, Öztekin Ö (2012) Leverage expectations and bond credit spreads. J. Financial Quant. Anal. 47:689–714.CrossrefGoogle Scholar
  • Frank M, Goyal V (2003) Testing the pecking order theory of capital structure. J. Financial Econom. 67:217–248.CrossrefGoogle Scholar
  • Frank M, Goyal V (2007) Corporate leverage: How much do managers really matter? Working paper, University of Minnesota, Minneapolis.Google Scholar
  • Goldstein R, Ju N, Leland H (2001) An EBIT-based model of dynamic capital structure. J. Bus. 74:483–512.CrossrefGoogle Scholar
  • Graham J, Harvey C (2001) The theory and practice of corporate finance: Evidence from the field. J. Financial Econom. 60:187–243.CrossrefGoogle Scholar
  • Harford J, Klasa S, Walcott N (2009) Do firms have leverage targets? Evidence from acquisitions. J. Financial Econom. 93:1–14.CrossrefGoogle Scholar
  • Hovakimian A, Li G (2011) In search of conclusive evidence: How to test for adjustment to target capital structure. J. Corporate Finance 17:33–44.CrossrefGoogle Scholar
  • Huang R, Ritter J (2009) Testing theories of capital structure and estimating the speed of adjustment. J. Financial Quant. Anal. 44:237–271.CrossrefGoogle Scholar
  • Kayhan A, Titman S (2007) Firms' histories and their capital structures. J. Financial Econom. 83:1–32.CrossrefGoogle Scholar
  • Lemmon M, Roberts M, Zender J (2008) Back to the beginning: Persistence and cross-section of corporate capital structure. J. Finance 63:1575–1608.CrossrefGoogle Scholar
  • Lockhart B (2014) Credit lines and leverage adjustments. J. Corporate Finace 25:274–288.CrossrefGoogle Scholar
  • Longstaff F, Mittal S, Neis E (2005) Corporate yield spreads: Default risk or liquidity? New evidence from the credit default swap market. J. Finance 60:2213–2253.CrossrefGoogle Scholar
  • Loughran T, Ritter J (1995) The new issues puzzle. J. Finance 50:23–51.CrossrefGoogle Scholar
  • MacKay P, Phillips G (2005) How does industry affect firm financial structure? Rev. Financial Stud. 18:1433–1466.CrossrefGoogle Scholar
  • Merton R (1974) On the pricing of corporate debt: The risk structure of interest rates. J. Finance 29:449–470.Google Scholar
  • Myers S (1984) The capital structure puzzle. J. Finance 39:575–592.CrossrefGoogle Scholar
  • Pan J, Singleton K (2008) Default and recovery implicit in the term structure of sovereign CDS spreads. J. Finance 63:2345–2384.CrossrefGoogle Scholar
  • Parsons C, Titman S (2009) Empirical capital structure: A review. Foundations and Trends in Finance 3:1–93.CrossrefGoogle Scholar
  • Rajan R, Zingales L (1995) What do we know about capital structure? Some evidence from international data. J. Finance 50:1421–1460.CrossrefGoogle Scholar
  • Rubinstein M (1994) Implied binomial trees. J. Finance 49:771–818.CrossrefGoogle Scholar
  • Shyam-Sunder L, Myers S (1999) Testing static tradeoff against pecking order models of capital structure. J. Financial Econom. 51:219–244.CrossrefGoogle Scholar
  • Titman S, Wessels R (1988) The determinants of capital structure choice. J. Finance 43:1–19.CrossrefGoogle Scholar
  • Woolridge J (2002) Econometric Analysis of Cross Section and Panel Data (MIT Press, Cambridge, MA).Google Scholar
  • Yu F (2005) Accounting transparency and the term structure of credit spreads. J. Financial Econom. 75:53–84.CrossrefGoogle Scholar
  • Zhang B, Zhou H, Zhu H (2009) Explaining credit default swap spreads with the equity volatility and jump risks of individual firms. Rev. Financial Stud. 22:5099–5131.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.