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Temporal Resolution of Uncertainty, the Investment Policy of Levered Firms and Corporate Debt Yields

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Author Info
Alexander Reisz
Abstract

This paper attempts to link the agency literature (concerned with whether debt will trigger underinvestment incentives or risk-shifting behavior) with the one dealing with temporal resolution of uncertainty. To the best of our knowledge, apart from one article by John and Ronen (1990), there is no research article linking the two literatures.

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File URL: http://www.stern.nyu.edu/fin/workpapers/papers99/wpa99044.pdf
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Paper provided by New York University, Leonard N. Stern School of Business- in its series New York University, Leonard N. Stern School Finance Department Working Paper Seires with number 99-044.

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Date of creation: 26 Oct 1999
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Handle: RePEc:fth:nystfi:99-044

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Postal: U.S.A.; New York University, Leonard N. Stern School of Business, Department of Economics . 44 West 4th Street. New York, New York 10012-1126
Web page: http://w4.stern.nyu.edu/finance/
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  1. Ross, Stephen A, 1989. " Information and Volatility: The No-Arbitrage Martingale Approach to Timing and Resolution Irrelevancy," Journal of Finance, American Finance Association, vol. 44(1), pages 1-17, March. [Downloadable!] (restricted)
  2. Hayne E. Leland., 1998. "Agency Costs, Risk Management, and Capital Structure," Research Program in Finance Working Papers RPF-278, University of California at Berkeley. [Downloadable!]
    Other versions:
  3. Goswami, Gautam & Noe, Thomas H & Rebello, Michael J, 1995. " Debt Financing under Asymmetric Information," Journal of Finance, American Finance Association, vol. 50(2), pages 633-59, June. [Downloadable!] (restricted)
  4. Stohs, Mark Hoven & Mauer, David C, 1996. "The Determinants of Corporate Debt Maturity Structure," Journal of Business, University of Chicago Press, vol. 69(3), pages 279-312, July. [Downloadable!] (restricted)
  5. Stapleton, R C & Subrahmanyam, Marti G, 1978. "A Multiperiod Equilibrium Asset Pricing Model," Econometrica, Econometric Society, vol. 46(5), pages 1077-96, September. [Downloadable!] (restricted)
  6. Ross, Stephen A, 1978. "A Simple Approach to the Valuation of Risky Streams," Journal of Business, University of Chicago Press, vol. 51(3), pages 453-75, July. [Downloadable!] (restricted)
  7. Stapleton, Richard C & Subrahmanyam, Marti G, 1984. " The Valuation of Multivariate Contingent Claims in Discrete Time Models," Journal of Finance, American Finance Association, vol. 39(1), pages 207-28, March. [Downloadable!] (restricted)
  8. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October. [Downloadable!] (restricted)
  9. Titman, Sheridan & Wessels, Roberto, 1988. " The Determinants of Capital Structure Choice," Journal of Finance, American Finance Association, vol. 43(1), pages 1-19, March. [Downloadable!] (restricted)
  10. Epstein, Larry G, 1980. "Decision Making and the Temporal Resolution of Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 269-83, June. [Downloadable!] (restricted)
  11. Green, Richard C., 1984. "Investment incentives, debt, and warrants," Journal of Financial Economics, Elsevier, vol. 13(1), pages 115-136, March. [Downloadable!] (restricted)
  12. Smith, Clifford W. & Stulz, Ren? M., 1985. "The Determinants of Firms' Hedging Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 20(04), pages 391-405, December. [Downloadable!]
  13. Duffie, Darrell & Lando, David, 2001. "Term Structures of Credit Spreads with Incomplete Accounting Information," Econometrica, Econometric Society, vol. 69(3), pages 633-64, May.
  14. John, Kose, 1987. " Risk-Shifting Incentives and Signalling through Corporate Capital Structure," Journal of Finance, American Finance Association, vol. 42(3), pages 623-41, July. [Downloadable!] (restricted)
  15. N. K. Chidambaran & John Kose, 1998. "Relationship Investing: Large Shareholder Monitoring with Managerial Cooperation," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-044, New York University, Leonard N. Stern School of Business-. [Downloadable!]
  16. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  17. DeAngelo, Harry & Masulis, Ronald W., 1980. "Optimal capital structure under corporate and personal taxation," Journal of Financial Economics, Elsevier, vol. 8(1), pages 3-29, March. [Downloadable!] (restricted)
  18. Alexander Reisz, 1999. "Temporal Resolution of Uncertainty and Corporate Debt Yields: an Empirical Investigation," New York University, Leonard N. Stern School Finance Department Working Paper Seires 99-043, New York University, Leonard N. Stern School of Business-. [Downloadable!]
  19. Leland, Hayne E, 1994. " Corporate Debt Value, Bond Covenants, and Optimal Capital Structure," Journal of Finance, American Finance Association, vol. 49(4), pages 1213-52, September. [Downloadable!] (restricted)
    Other versions:
  20. Gavish, Bezalel & Kalay, Avner, 1983. "On the Asset Substitution Problem," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 18(01), pages 21-30, March. [Downloadable!]
  21. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-54, May-June. [Downloadable!] (restricted)
  22. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March. [Downloadable!] (restricted)
  23. John, Teresa A & John, Kose, 1993. " Top-Management Compensation and Capital Structure," Journal of Finance, American Finance Association, vol. 48(3), pages 949-74, July. [Downloadable!] (restricted)
  24. Degeorge, Francois & Patel, Jayendu & Zeckhauser, Richard, 1999. "Earnings Management to Exceed Thresholds," Journal of Business, University of Chicago Press, vol. 72(1), pages 1-33, January. [Downloadable!] (restricted)
    Other versions:
  25. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September. [Downloadable!] (restricted)
  26. Smith, Clifford Jr. & Warner, Jerold B., 1979. "On financial contracting : An analysis of bond covenants," Journal of Financial Economics, Elsevier, vol. 7(2), pages 117-161, June. [Downloadable!] (restricted)
  27. Epstein, Larry G & Turnbull, Stuart M, 1980. " Capital Asset Prices and the Temporal Resolution of Uncertainty," Journal of Finance, American Finance Association, vol. 35(3), pages 627-43, June. [Downloadable!] (restricted)
  28. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November. [Downloadable!] (restricted)
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