Cash flow correlations, debt maturity choice, and asymmetric information

Noe, Thomas (1993) Cash flow correlations, debt maturity choice, and asymmetric information. In: American Finance Association Meetings, 7 January, 1993, Anaheim, California, USA.

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Abstract

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.

Item Type: Conference or Workshop Item (Paper)
Keywords: Asymmetric information; Debt
Subject(s): Finance
Centre: Faculty of Finance
Date Deposited: 07 Jun 2012 08:35
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/3842

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