This study investigates whether deviation from target leverage (leverage adjustment speed) in firms with small positive earnings (i.e., SPOS) is higher (slower) than that of other firms. We find evidence suggesting that managers of SPOS manipulate sales, production processes, and discretionary expenses to avoid reporting losses. Our results show that deviation from target leverage in SPOS is hi...

A firm’s current leverage ratio is one of the core characteristics of credit quality used in statistical default prediction models. Based on the capital structure literature, which shows that leverage is mean-reverting to a target leverage, we forecast future leverage ratios and include them in the set of default risk drivers. The analysis is done with a discrete duration model. Out-of-sample a...

The main purpose of this research is the study on effect of Financial and Operating Leverage and Venture Capital on Tobin's Q ratio amongst companies listed in Tehran Stock Exchange. In this research, the Holdings and Investment companies are used as statistical samples and 73 enterprises that are listed in Tehran Stock Exchange within 2001 to 2016 have been studied. The results driven by this ...

Under the new Basel III banking regulations, a non-risk based leverage ratio will be introduced alongside the risk-based capital requirement. This move away from a solely risk-based capital framework has raised some concern of increased bank risk-taking; potentially offsetting any benefits from requiring highly leveraged banks to hold more capital. We address exactly this tradeoff between addit...

Using the generalized extreme value theory to characterize tail distributions, we address liquidation, leverage, and optimal margins for bitcoin long short futures positions. The empirical analysis of perpetual on BitMEX shows that (1) daily forced liquidations out- standing are substantial at 3.51%, 1.89% short; (2) investors got liquidation do trade aggressively with average leverage 60X; (3)...

t is the purpose of this paper to contribute to the discussion initiated bywachter about the parallelism between principal component (pc) and atypological grade of membership (gom) analysis. the author testedempirically the close relationship between both analysis in a lowdimensional framework comprising up to nine dichotomous variables and twotypologies. our contribution to the subject is also...

Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. First, our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no default. Thus actual default is irrelevant, though the potential for default drives the equilibrium a...