Dirk Hackbarth

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We create a novel measure of optimism using the Survey of Consumer Finance by comparing self-reported life expectancy to that implied by statistical tables. This measure of optimism correlates with positive beliefs about future e onomic conditions and with psychometric tests of optimism. Optimism is related to numerous work/life choices: more optimistic(More)
In the neoclassical theory of the firm, actions are taken to maximize the present value of the firm’s cash flows -there is no role for managerial attitudes in forming corporate policies. In contrast, our paper provides striking evidence that links psychological traits such as managerial risk aversion, time preference, and optimism to corporate financial(More)
This paper develops a framework for analyzing the impact of macroeconomic conditions on credit risk and dynamic capital structure choice. We begin by observing that when cash flows depend on current economic conditions, there will be a benefit for firms to adapt their default and financing policies to the position of the economy in the business cycle phase.(More)
This paper provides evidence of the real effects of financial markets. Using mutual fund redemptions as an instrument for price changes, we identify a strong effect of market prices on takeover activity (the “trigger effect”). An inter-quartile decrease in valuation leads to a 7 percentage point increase in acquisition likelihood, relative to a 6%(More)
We examine the default probabilities predicted by “structural” models of risky corporate debt. Two types of models are examined: those with “exogenous” default boundaries, typified by Longstaff and Schwartz (1995); and those with “endogenous” default boundaries, typified by Leland and Toft (1996). We focus on default probabilities rather than credit spreads(More)
0378-4266/$ see front matter 2010 Elsevier B.V. A doi:10.1016/j.jbankfin.2010.02.019 q We thank Doron Avramov, Turan Bali, Antonio Faulkender, Thorsten Hens, Craig Holden, Tim Joh Lando, Michael Lemmon, Igor Lončarski, Christian Lu Mathur (the Editor), Roni Michaely, Vassil Mihov, Ada Trzcinka, Haluk Unal, Josef Zechner, and especially an helpful comments(More)
Much empirical work indicates that there are common factors that drive the equity risk premium and credit spreads. In this paper, we embed a structural model of credit risk inside a dynamic consumption-based asset pricing model. That allows us to price equity, default-risky debt and study the co-movement of stock and bond price variables in a single(More)
We examine the optimal mixture and priority structure of bank and market debt using a trade-off model in which banks have the unique ability to renegotiate outside formal bankruptcy. Flexible bank debt offers a superior trade-off between tax shields and bankruptcy costs. Ease of renegotiation limits bank debt capacity, however. Optimal debt structure hinges(More)