Why Does Capital Structure Choice Vary with Macroeconomic Conditions?

@article{Levy2000WhyDC,
  title={Why Does Capital Structure Choice Vary with Macroeconomic Conditions?},
  author={A. Levy},
  journal={Corporate Finance: Capital Structure \& Payout Policies},
  year={2000}
}
  • A. Levy
  • Published 2000
  • Economics
  • Corporate Finance: Capital Structure & Payout Policies
This paper develops a calibrated model that explains the pronounced counter-cyclical leverage patterns observed for firms that access public capital markets, and relates these patterns to debt and equity issues. Moreover, it explains why leverage and debt issues do not exhibit this pronounced behavior for firms that face more severe constraints when accessing capital markets. In the model, managers issue a combination of debt and equity to finance investment by weighting the trade-off between… Expand

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