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Behavioral Issues in Capital Structure by W Moe is a document available to read on EtoBox.
What is Behavioral Issues in Capital Structure about?
The chapter discusses how behavioral factors influence capital structure decisions more than traditional considerations like taxes and costs of distress. Managers prioritize avoiding dilution from new equity issues, timing equity issues to take advantage of temporary stock mispricing, and maintaining financial flexibility over target debt ratios. Behavioral models find investment is overly sensitive to cash flows when managers are overly optimistic, leading cash-rich firms to overinvest and cash-poor firms
- Author
- W Moe
- Language
- EN