|
EconStor >
Verein für Socialpolitik >
Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/37294
|
| | |
| Title: | | Limited Risk-Sharing and Capital Structure  |
| Authors: | | Schüwer, Ulrich |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Capital Structure and Taxation G7-V2 |
| Abstract: | | This paper develops a model where firms' equilibrium capital structures depend on firms' risk characteristics and investors' aggregate risk appetite. I assume that the law of one price fails because security markets are incomplete and risk-sharing through short-selling or borrowing is limited. Investors have heterogeneous risk preferences. Thus, firms can create value through the issuance of debt and equity securities that optimally meet investor demand. I show that, in equilibrium, firms with high market risk have a lower debt ratio than firms with low market risk. Empirical evidence that completes this paper supports the relevance of this theoretical result. |
| Subjects: | | capital structure security design risk-sharing segmented markets |
| JEL: | | G32 D52 G12 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
|
| Files in This Item:
| |
|
| No. of Downloads:
| |
| last Month |
last 3 Month |
total |
|
|
|
|
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/37294
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|