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Testing Models of Dynamic Trade Off Theory

2007
Dynamic trade off theory suggests that firms let their leverage ratios vary within an optimal range. I develop an empirical model that estimates how the determinants of capital structure affect the two boundaries that define firms' optimal leverage ranges. Empirical evidence supports the predictions of dynamic trade off theory. Volatility increases the
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The Kraus-Litzenberger Zero-Sum Trade-Off Theory

SSRN Electronic Journal, 2015
This paper proves that the objective function by Kraus and Litzenberger (1973) is always zero. Hence, any traded off must be zero-sum. Their inclusion of the bankruptcy variable belongs to the creditor, not the firm. This paper then works out another version of trade off: one between debt and equity, and shows that such trade off is rarely one-sided ...
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Bankruptcy of the Famous Trade-Off Theory

2023
Peter Brusov   +2 more
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International Evidence on a New Keynesian Theory of the Output-Inflation Trade-off

Journal of Money, Credit and Banking, 1991
This article provides empirical evidence on the validity of a "New Keynesian" theory of the output-inflation tradeoff. The theory, offered by Laurence Ball, N. Gregory Mankiw, and David Romer (1988), synthesizes recent work on "menu costs" and imperfect competition used to ground Keynesian theory in maximizing behavior.
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Cancer Risk Among World Trade Center Rescue and Recovery Workers: A Review

Ca-A Cancer Journal for Clinicians, 2022
Andrew C Todd   +2 more
exaly  

Trade-Off Theory of Capital Structure with Endogenous Taxes

We analyze the trade-off theory of capital structure with endogenous tax rates. In our model, the government first selects tax rates and then firms with investment projects select their capital structures driven by the trade-off between expected bankruptcy costs and the effective debt tax rate advantage.
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Trade-Off Theory.

American Economic Review, 1994
Campbell, Donald E, Kelly, Jerry S
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