Abstract
This study Investigates the influence of the type of Investment opportunities facing a firm on its choice of capital structure.It Is shown that the more discretionary Investment opportunities a firm faces, the lower its financial leverage.Inclusion of other possible determinants of capital structure, such as availability of internal funds, tax effects and risk, while significant, do not affect the importance of discretionary investment.The evidence supports (1) the existence of a moral bazzard problem which inversely relates risky debt and discretionary investment choice, and (2) a desire by most firms to use sources of internal funds prior to entering the capital market.
Keywords
BusinessLeverage (statistics)FinanceInvestment (military)Financial systemEconomicsComputer scienceArtificial intelligence
Affiliated Institutions
Related Publications
The Impact of Capital Structure Change on Firm Value: Some Estimates
This study develops a model based on current corporate finance theories which explains stock returns associated with the announcement of issuer exchange offers. The major indepe...
The Capital Structure Puzzle
This paper contrasts the and theories of capital structure choice by corporations. In the static tradeoff theory, optimal capital structure is reached when the tax advantage...
The Capital Structure Puzzle
Stewart C. Myers President of American Finance Association 1983 This paper's title is intended to remind you of Fischer Black's well-known note on “The Dividend Puzzle,” which h...
Equilibrium in a Capital Asset Market
This paper investigates the properties of a for risky assets on the basis of a simple model of general equilibrium of exchange, where individual investors seek to maximize pref...
DEBT AND TAXES*
The somewhat heterodox views about debt and taxes that will be presented here have evolved over the last few years in the course of countless discussions with several of my pres...
Publication Info
- Year
- 1983
- Type
- report
- Citations
- 231
- Access
- Closed
External Links
Social Impact
Altmetric
PlumX Metrics
Social media, news, blog, policy document mentions
Citation Metrics
231
OpenAlex
Cite This
Michael S. Long,
Ileen B. Malitz
(1983).
Investment Patterns and Financial Leverage.
.
https://doi.org/10.3386/w1145
Identifiers
- DOI
- 10.3386/w1145