On testing the Tradeoff Theory of capital structure with real options

We explain often anomalous results of capital structure tests by infusing tradeoff theory with real options. Of course one can explain almost everything using a soft qualitative theory. This paper's addition is to use a quantitative approach to generate tradeoff theory predictions for firms with valuable real options. We are able to explain many of the results of Rajan and Zingales (1995), Welch (2004), and Flannery and Rangan (2006).

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2012

Author dc:creator

• Shore, William T., S.M. (William Thomas). Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• Stewart C. Myers.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/72844

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/72844