Risk Tolerance and Entrepreneurship A tradition from Knight (1921) argues that more risk tolerant individuals are more likely to become entrepreneurs, but perform worse. We test these predictions with two risk tolerance proxies: stock market participation and personal leverage. Using investment data for 400,000 individuals, we find that common stock investors are around 50 percent more likely t...

This paper investigates how multinational firms choose their capital structure in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, like expropriation, corruption and confiscatory taxation, and In our theoretical analysis we find that as political risk increases t...

This paper argues that trade liberalization has a potentially significant impact on financial leverage. We compare the predictions of the trade-off model of capital structure with the pecking order model. In the first case, we suggest that trade liberalization affects the trade-off between the tax advantages of debt and expected bankruptcy costs. This implies that a reduction in domestic tariff...

We introduce the concept of ordinal pattern dependence between time series and show in an explorative study that both types of this dependence show up in real world nancial data. The classical way to capture the leverage e ect in models for stock markets is to assume a negative correlation between the two datasets which is constant in time (e.g. Barndor Nielsen and Shepard (2002)). However, the...