EconPapers    
Economics at your fingertips  
 

Corporate Bankruptcies, Investment and Equilibrium Capital Structures

Richard Harris

Working Paper from Economics Department, Queen's University

Abstract: This paper proposes a general equilibrium model with the feature that value maximizing firms which obtain financing in a competitive capital market will, when bankruptcy is possible, have capital structures which are equilibrium determined variables. This contrasts the traditional view which suggests when the corporation's bond are risky it must choose an optimal capital structure. The firm's investment decision will depend upon its capital structure parameter and the nominal interest rate on its bonds. In addition, the competitive allocation of investment is not efficient.

Date: 1976
References: Add references at CitEc
Citations: Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:qed:wpaper:213

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().

 
Page updated 2019-12-19
Handle: RePEc:qed:wpaper:213