Noe, Thomas, Goswami, Gautam and Rebello, Michael (1997) Cash flows and debt maturity. Economica, 64 (254). pp. 303-316.
In an asymmetric information framework, a number of authors have demonstrated the existence and uniqueness of short-term debt pooling equilibria in the absence of dissipative costs. We show that short-term debt pooling is robust to a broad range of deviations from stationarity and intertemporal independence. However, with intertemporal dependence, separating equilibria exist in which short-term debt signals favourable information. Non-stationary allows for separating equilibria in which long-term debt signals favourable information. A range of deviations from stationarity and intertemporal independence also support long-term debt pooling equilibria.
|Keywords:||cash flow; corporate debt; risk management|
|Centre:||Faculty of Finance|
|Date Deposited:||10 Nov 2011 12:52|
|Last Modified:||23 Oct 2015 14:06|
Actions (login required)