Firm asset structure and risk aversion

Chenxi Wang

Economics Letters, 2022, vol. 221, issue C

Abstract: I study the optimal portfolio choice of risk-averse entrepreneurs in a costly state verification framework. The model generates opposite responses of firm leverage and safe asset share, which are consistent with the empirical evidence.

Keywords: Risk aversion; Safe asset; Leverage; Business cycle; Financial accelerator (search for similar items in EconPapers)
JEL-codes: D81 D82 E32 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:221:y:2022:i:c:s0165176522003871

DOI: 10.1016/j.econlet.2022.110913

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