Earticle

초록

영어

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.

목차

Abstract
 1. Introduction
 2. The Underinvestment Problem with Risky Debt
 3. The Underinvestment Problem with Asymmetric Information
 4. A Closer Look at Target Debt Ratios
 5. Numerical Examples
  5.1 Resolving the Underinvestment Problem with Risky Debt
  5.2 Resolving the Underinvestment Problem with Asymmetric Information
 6. Are Target Debt Ratios Effective?
 7. Conclusion
 References
 Appendix

키워드

저자

• Unyong Pyo [ Unyong Pyo, Faculty of Business, Brock University, St. Catharines, Ontario L2S3A1, Canada. ] Corresponding author
• Yong Jae Shin [ Department of Business Administration, Soong-Eui Women’s College, Seoul, 100-751, South Korea ]
• Howard E. Thompson [ Professor Emeritus, School of Business, University of Wisconsin-Madison, 97 University Avenue, Madison, Wisconsin, ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330