Erwan Morellec

TL;DR: In this article, the authors develop a framework for analyzing the impact of macroeconomic conditions on credit risk and dynamic capital structure choice and demonstrate 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.

TL;DR: In this article, the authors develop a framework for analyzing the impact of macroeconomic conditions on credit risk and dynamic capital structure choice and demonstrate 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.

TL;DR: In this article, the authors investigate the impact of asset liquidity on the valuation of corporate securities and the firm's financing decisions and show that asset liquidity increases debt capacity only when bond covenants restrict the disposition of assets.

TL;DR: In this paper, the impact of managerial discretion and corporate control mechanisms on leverage and firm value within a contingent claims model where the manager derives perquisites from investment was analyzed and the model showed that manager-shareholder conflicts can explain the low debt levels observed in practice.

TL;DR: The authors developed a dynamic tradeoff model to examine the importance of manager-shareholder conflicts in capital structure choice and showed that while refinancing costs help explain the patterns observed in the data, their quantitative effects on debt choices are too small to explain financing decisions.