This paper argues that occasionally binding borrowing limits and non-trivial equity trading costs signi cantly increase the probability of a Sudden Stop post nancial liberalization, which in turn, signi cantly alters the long run external capital structure of an emerging market economy. Upon opening the capital account, agents in the emerging market have an incentive to accumulate debt and sell...

This paper develops a model of optimal government debt maturity in which the government cannot issue state-contingent bonds and cannot commit to fiscal policy. If the government can perfectly commit, it fully insulates the economy against government spending shocks by purchasing short-term assets and issuing long-term debt. These positions are quantitatively very large relative to GDP and do no...

_____________________________________________________________________________ Abstract: Significant increases in the level of target leverage have been previously documented, following unsuccessful takeover attempts. Increased leverage may signal managerial commitment to improved performance, suggesting that corporate performance and leverage should be positively related. If, however, the incre...

this study empirically examines whether managers manipulate reported income through the timing of sales of long-lived assets and investments. several empirical implications of the income-smoothing and debt-equity hypothesis in the context of asset sales were tested. the findings are consistent with the timing of asset sales by managers so that the recognized accounting income from these sales s...

Funding decision is one of the financial strategic decisions of a corporation. There are also two other finan-cial strategic decisions that a corporation faces, the investment and the dividend decision. This paper de-scribes briefly the investment and the dividend decision, although its main focus is on funding decision. In de-scribing the funding decision the researchers will first explain the...