The Leverage Ratchet Effect
By Anat R. Admati, Peter M. DeMarzo, Martin F. Hellwig, P. Pfleiderer. 2017
264 citations recorded by the source corpus.
Subfields: Accounting, Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/5ac5df482f1aa2acc5b438e4548c397c2216a049
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Todd A. Gormley
- David A. Matsa
- Erik P. Gilje
- Adrien Matray
- Caroline Flammer
- Jennifer Brown
- Sirui Yin
- Xiaoran Ni
In Economics and Econometrics
- Todd A. Gormley
- David A. Matsa
- Cesare Fracassi
- Erik P. Gilje
- Allen Carrion
- Da Ke
- Jarrad Harford
- Sirui Yin
In Finance
Citations in the corpus
- Fire‐Sale Spillovers and Systemic Risk (2015, unknown): “Another recent and concrete example is the “leverage ratchet” model in Admati et al. (2018), where leverage is history-dependent and downward rigid. 37Hirtle (2016) shows that dividends remained smooth even during the last financial crisis.”
- Playing It Safe? Managerial Preferences, Risk, and Agency Conflicts (2016, background): “This downward rigidity in leverage could possibly result from a leverage ratchet effect (Admati et al., 2013) and is reminiscent of Ljungqvist and Heider’s (2015) finding that leverage responds to increases but not decreases in the corporate tax rate.”
- As Certain as Debt and Taxes: Estimating the Tax Sensitivity of Leverage from State Tax Changes (2015, unknown): “Admati et al. (2013) construct a model rationalizing such a ratchet effect.8 Our quasi-experimental setting exploits variation in the marginal tax benefit of debt and thereby allows us to trace out the marginal cost of debt curve for the average firm.”
- Leverage Dynamics without Commitment (2021, unknown): “Our paper is most closely related to Admati et al. (2018).”
- The Reversal Interest Rate (2018, unknown): “Debt overhang is one underpinning for this behavior (Admati et al., 2017).”
- Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2018, unknown): “, Jensen and Meckling, 1976; Admati et al., 2018). The empirical literature does not find strong results in either direction (under- or over-investment)6. Moreover, recent theoretical work by Aragón (2019) argues for mitigating factors arising from the firm losing access to credit when a creditor be”