Are Firms Underleveraged? An Examination of the Effect of Leverage on Default Probabilities

By Carlos A. Molina. 2005

314 citations recorded by the source corpus.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/db168f51f6eb6a9a38ba825febc8407cc8c15198

How researchers see this paper

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In Accounting

1. Murray Z. Frank
2. Vidhan K. Goyal
3. Chen Lin
4. W. Guay
5. John E. Core
6. Thomas J. Chemmanur
7. Michael Firth
8. Jennifer Blouin

In Finance

1. Murray Z. Frank
2. Vidhan K. Goyal
3. W. Guay
4. John E. Core
5. Thomas J. Chemmanur
6. Jennifer Blouin
7. Michael Firth
8. Chen Lin

Citations in the corpus

• Leverage and investment under a state-owned bank lending environment : evidence from China (2008, methodology): “(2005) and Molina (2005) and use Tangibility, defined as the proportion of the value of tangible assets to total assets, as an instrumental variable.”
• Trade Receivables Policy of Distressed Firms and Its Effect on the Costs of Financial Distress (2009, background): “Previous studies have focused on the estimation of the costs of financial distress (Altman, 1984; Alderson and Betker, 1995; Andrade and Kaplan, 1998; Molina, 2005), in some cases explicitly recognizing the importance of the relations with clients for capital structure decisions and for the costs of”
• A Market-Based Study of the Cost of Default (2012, background): “Davydenko, Strebulaev, and Zhao The Cost of Default”
• Endogeneity in Accounting and Finance Research: Natural Experiments as a State-of-the-Art Solution (2015, unknown): “Nguyen and Nielsen (2010) use the sudden death of independent directors identified from companies listed on Amex, NASDAQ, and NYSE from 1994–2007.”
• Indirect Costs of Financial Distress in Durable Goods Industries: The Case of Auto Manufacturers (2013, methodology): “Our computation using average marginal costs and benefits is closest to the literature using static trade-off models to evaluate the magnitude of the benefits of financial distress, such as Graham (2000), Molina (2005), and Almeida and Philippon (2007).”
• Human Capital, Capital Structure, and Employee Pay: An Empirical Analysis (2013, methodology): “When examining the effect of firms' leverage on bond ratings, Molina (2005) also uses marginal tax rate as an instrument for leverage.”
• Have the tax benefits of debt been overestimated (2010, methodology): “Molina (2005) and Almeida and Philippon (2007) argue that, because Graham’s estimates of distress costs are too small, he overestimates the extent to which firms are 27 underleveraged.”
• Market Conditions, Default Risk and Credit Spreads (2010, unknown): “We are aware of only a couple of studies, such as Minton and Schrand (1999) and Molina (2005), that analyze the effect of cash flow volatility on corporate bond yield spreads.”
• How Do Pensions Affect Corporate Capital Structure Decisions (2010, unknown): “Faulkender and Petersen (2006) highlight the role of supply side constraints faced by lenders and Molina (2005) and Almeida and Philipon (2007) note the importance of measuring the ex ante probability of distress and credit spreads.”