The Leverage Ratchet Effect

• 成果类型: Article
• 署名作者: Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin F.; Pfleiderer, Paul
• 署名单位: Stanford University; Max Planck Society
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12588
• 发表日期: 2018
• 页码: 145-198
• 关键词: capital structure; AGENCY COSTS; corporate-finance; debt; INVESTMENT; bankruptcy; DYNAMICS; maturity; tests; MODEL

摘要

Firms' inability to commit to future funding choices has profound consequences for capital structure dynamics. With debt in place, shareholders pervasively resist leverage reductions no matter how much such reductions may enhance firm value. Shareholders would instead choose to increase leverage even if the new debt is junior and would reduce firm value. These asymmetric forces in leverage adjustments, which we call the leverage ratchet effect, cause equilibrium leverage outcomes to be history-dependent. If forced to reduce leverage, shareholders are biased toward selling assets relative to potentially more efficient alternatives such as pure recapitalizations.