We study the implications of credit market frictions for the dynamics of corporate capital structure and the risk of default of corporations. To do so, we develop a dynamic capital structure model in which firms face uncertainty regarding their ability to ...
Background Recent neuroimaging studies suggest that value-based decision-making may rely on mechanisms of evidence accumulation. However no studies have explicitly investigated the time when single decisions are taken based on such an accumulation process. ...
We propose a model that jointly determines the capital structure and investment decisions taking business cycle and debt maturity into account. It endogenously determines the triggers of investment/disinvestment and default, which depend on the state of th ...