Berk, Jonathan, Stanton, Richard, Zechner, Josef. 2010. Human Capital, Bankruptcy and Capital Structure. Journal of Finance 65 (3): S. 891-926.
BibTeX
Abstract
We derive a firm's optimal capital structure and managerial compensation contract when employees are averse to bearing their own human capital risk, while equity holders can diversify this risk away. In the presence of corporate taxes, our model delivers optimal debt levels consistent with those observed in practice. It also makes a number of predictions for the cross-sectional distribution of firm leverage. Consistent with existing empirical evidence, it implies persistent idiosyncratic differences in leverage across firms. An important new empirical prediction of the model is that, ceteris paribus, firms with more leverage should pay higher wages.
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Status of publication | Published |
---|---|
Affiliation | WU |
Type of publication | Journal article |
Journal | Journal of Finance |
Citation Index | SSCI |
WU Journalrating 2009 | A+ |
Starjournal | Y |
Language | English |
Title | Human Capital, Bankruptcy and Capital Structure |
Volume | 65 |
Number | 3 |
Year | 2010 |
Page from | 891 |
Page to | 926 |
DOI | http://dx.doi.org/10.1111/j.1540-6261.2010.01556.x |
Associations
- People
- Zechner, Josef (Details)
- External
- Berk, Jonathan (University of California at Berkeley, United States/USA)
- Stanton, Richard (University of California at Berkeley, United States/USA)
- Organization
- Institute for Finance, Banking and Insurance IN (Details)