Leverage and Growth Opportunities: Risk-Avoidance Induced by Risky Debt

Pricing Risky Debt : An Empirical Comparison ofLongsta

We are particularly thankful to Professors Ieuan Morgan and Stuart Turnbull for their guidance. We would also like to thank Abstract We compare Longstaa and Schwartz (1995) (the LS model) and Merton (1974) using Eurodollar data. We show that both models are restrictive for money market securities due to modelling arrival time of default as a predictable process, which implies that credit term s...

The Survey Relationship between Growth Opportunities, Corpo-rate Risk and Changes in Cash Holdings

The aim of this study was to investigate the relationship between growth opportunities, risks, and relative changes in the Company's cash assets. This study is a literature study and analysis was based on an analysis of panel data. In this study, a financial data of 112 companies listed in Tehran Stock Exchange during the period 2009 to 2014 have been reviewed. The results in relation to the fi...

Risk Aversion, the Demand for Risky Assets, and Recoveries on Defaulted Corporate Debt Securities

In this paper we examine whether variation in investors’ demand for risky assets is associated with recoveries on defaulted debt securities. Our examination is motivated by the prediction of standard portfolio separation theorems that an increase in aggregate investor risk aversion is associated with a decrease in the demand for the market portfolio of risky assets. Motivated by this prediction...

0 3 0 1 Monitoring and Controlling Bank Risk : Does Risky Debt Serve any

Firm value, risk, and growth opportunities

We show that Tobin's q, as proxied by the ratio of the firm's market value to its book value, increases with the firm's systematic equity risk and falls with the firm's unsystematic equity risk. Further, an increase in the firm's total equity risk is associated with a fall in q. The negative relation between the change in total risk and the change in q is robust through time for the whole sampl...