The Leverage Ratchet Effect

Research, Article, Preprint OPEN
Anat R. Admati; Peter M. DeMarzo; Martin F. Hellwig; Paul Pfleiderer;
  • Publisher: Max Planck Institute for Research on Collective Goods
  • Subject:
    • ddc: ddc:330

Shareholder-creditor conflicts can create leverage ratchet effects, resulting in inefficient capital structures. Once debt is in place, shareholders may inefficiently increase leverage but avoid reducing it no matter how beneficial leverage reduction might be to total f... View more
  • References (17)
    17 references, page 1 of 2

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