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Debt-financing under asymmetric information

Abstract:

The authors analyze the optimal design of debt maturity, coupon payments, and dividend payout restrictions under asymmetric information. They show that, if the asymmetry of information is concentrated around long-term cash flows, firms finance with coupon-bearing long-term debt that partially restricts dividend payments. If the asymmetry of information is concentrated around near-term cash flows and there exists considerable refinancing risk, firms finance with coupon-bearing long-term debt t...

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Publication date:
1995-01-01
UUID:
uuid:54aaa16f-a6cb-4901-8245-73c5f33f8356
Local pid:
oai:eureka.sbs.ox.ac.uk:1138
Deposit date:
2011-11-11

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