This paper studies the behavior of leverage ratios in a dynamic trade-off model with real frictions. Firms underutilize debt when financing investment to retain financial flexibility. Underutilization of debt persists even when firms exercise their last investment options, and it is more (less) severe for more back-loaded (front-loaded) investment opportunities. Thus, leverage dynamics cruciall...

Financing pattern of firms from developing nation always remains a mystifying area of finance. Present study aims to investigate the determinants of capital structure. Moreover, it is also tried to answer that how these potential determinants can affect financing pattern of developing nation firms. To achieve research objectives data for 323 Pakistani manufacturing firms have taken for the peri...

The impact of financial leverage on firm investment is one of the most important issues in corporate finance. Debt overhang reduces the incentives of shareholder–management coalition in controlling the firm to invest in positive net-present-value investment opportunities. On the other hand, firms without debt in their financial structure face with a new problem known as over-investment. T...

Simulation study is very important in model validation. It is invaluable and versatile tool especially in statistical problems and modeling where analytical technique is inadequate. In fitting to a model, problems will raise when there exists one or more high-leverage points in the data set. Due to the fact that the presence high-leverage points are commonly occurred in models fitting, we propo...

This study aims to provide empirical evidence of the effect investment, free cash flow, earnings management, interest coverage ratio, liquidity and leverage on financial distress. The dependent variable is distress as measured by Altman Z-score. independent variables are total assets growth a proxy for management with modified Jones model, liquidity. was tested using ordinal logistic regression...