On the irrelevance of financial policy under market incompleteness and trading constraints

Orhan Erem Atesagaoglu and Eva Carceles-Poveda

Economics Letters, 2015, vol. 136, issue C, 125-128

Abstract: We study the Modigliani and Miller Theorem under portfolio constraints. We show that there exist state-dependent trading limits under which financial policy is irrelevant. In addition, a no short-selling constraint on equity is innocuous in spite of being state-independent.

Keywords: Financial policy; Incomplete markets; Trading constraints (search for similar items in EconPapers)
JEL-codes: E1 G1 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176515003572
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:136:y:2015:i:c:p:125-128

DOI: 10.1016/j.econlet.2015.09.007

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().