Building up Financial Flexibility

Abstract

We ask how …rms should build up …nancial ‡exibility by initially choosing high or low target leverage. This depends on whether additional …nancing is raised at competitive terms, as then there will be a problem of either overinvestment or underinvestment. The role of the initial (or target) capital structure is that it a¤ects the "outside options" of both… (More)

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Cite this paper

@inproceedings{Inderst2013BuildingUF, title={Building up Financial Flexibility}, author={Roman Inderst and Vladimir Vladimirovy}, year={2013} }