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Leverage Dynamics without Commitment
Source: onlinelibrary.wiley.com
Article summary:
1. This article discusses the dynamics of leverage without commitment, exploring topics such as market timing and capital structure, debt maturity, liquidity risk management, corporate credit interventions, and more.
2. It examines theories such as Tobin's q, the leverage ratchet effect, optimal debt dynamics, and the maturity rat race.
3. The article also looks at empirical research on capital structure actions and dynamic capital structure choice.
Article analysis:
The article is generally reliable and trustworthy in its presentation of information. It provides a comprehensive overview of the dynamics of leverage without commitment by examining various theories and empirical research on the topic. The sources cited are all reputable academic journals or working papers from well-known universities or institutions. Furthermore, the authors provide detailed explanations for each theory or research study discussed in the article.
However, there are some potential biases that should be noted. For example, while the authors do discuss counterarguments to certain theories or studies presented in the article (such as Coase’s durability and monopoly theory), they do not explore these counterarguments in depth or present any evidence to support them. Additionally, some of the studies mentioned may be outdated due to their publication date (e.g., Fischer et al., 1989). Finally, it should be noted that this article does not present both sides equally; rather it focuses primarily on presenting evidence that supports its main argument that leverage dynamics can be achieved without commitment.