Explore the vast range of titles available.

We characterize equilibrium leverage dynamics in a trade-off model in which the firm can continuously adjust leverage and cannot commit to a policy ex ante. While the leverage ratchet effect leads shareholders to issue debt gradually over time, asset growth and debt maturity cause leverage to mean-revert slowly toward a target. Investors anticipate future debt issuance and raise credit spreads, fully offsetting the tax benefits of new debt. Shareholders are therefore indifferent toward the debt maturity structure, even though their choice significantly affects credit spreads, leverage levels, the speed of adjustment, future investment, and growth.

This paper examines the relative importance of many factors in the capital structure decisions of publicly traded American firms from 1950 to 2003. The most reliable factors for explaining market leverage are: median industry leverage (+ effect on leverage), market-to-book assets ratio (-), tangibility (+), profits (-), log of assets (+), and expected inflation (+). In addition, we find that dividend-paying firms tend to have lower leverage. When considering book leverage, somewhat similar effects are found. However, for book leverage, the impact of firm size, the market-to-book ratio, and the effect of inflation are not reliable. The empirical evidence seems reasonably consistent with some versions of the trade-off theory of capital structure.

We develop a general equilibrium model linking the pricing of stocks and corporate bonds to endogenous movements in corporate leverage and aggregate volatility. The model features heterogeneous firms making optimal investment and financing decisions and connects fluctuations in macroeconomic quantities and asset prices to movements in the cross section of firms. Empirically plausible movements in leverage produce realistic asset return dynamics. Countercyclical leverage drives predictable variation in risk premia, and debt-financed growth generates a high value premium. Endogenous default produces countercyclical aggregate volatility and credit spread movements that are propagated to the real economy through their effects on investment and output.

Humanity is on a deeply unsustainable trajectory. We are exceeding planetary boundaries and unlikely to meet many international sustainable development goals and global environmental targets. Until recently, there was no broadly accepted framework of interventions that could ignite the transformations needed to achieve these desired targets and goals. As a component of the IPBES Global Assessment, we conducted an iterative expert deliberation process with an extensive review of scenarios and pathways to sustainability, including the broader literature on indirect drivers, social change and sustainability transformation. We asked, what are the most important elements of pathways to sustainability? Applying a social–ecological systems lens, we identified eight priority points for intervention (leverage points) and five overarching strategic actions and priority interventions (levers), which appear to be key to societal transformation. The eight leverage points are: (1) Visions of a good life, (2) Total consumption and waste, (3) Latent values of responsibility, (4) Inequalities, (5) Justice and inclusion in conservation, (6) Externalities from trade and other telecouplings, (7) Responsible technology, innovation and investment, and (8) Education and knowledge generation and sharing. The five intertwined levers can be applied across the eight leverage points and more broadly. These include: (A) Incentives and capacity building, (B) Coordination across sectors and jurisdictions, (C) Pre‐emptive action, (D) Adaptive decision‐making and (E) Environmental law and implementation. The levers and leverage points are all non‐substitutable, and each enables others, likely leading to synergistic benefits. Transformative change towards sustainable pathways requires more than a simple scaling‐up of sustainability initiatives—it entails addressing these levers and leverage points to change the fabric of legal, political, economic and other social systems. These levers and leverage points build upon those approved within the Global Assessment's Summary for Policymakers, with the aim of enabling leaders in government, business, civil society and academia to spark transformative changes towards a more just and sustainable world. A free Plain Language Summary can be found within the Supporting Information of this article. A free Plain Language Summary can be found within the Supporting Information of this article.

This paper seeks to examine the extent to which environmental, social, and governance (ESG) disclosure affects capital structure and cost of capital for non-financial Fortune 500 firms. With a sample period from 2007 to 2022 and a system (Generalized Method of Moments) GMM estimation method, we investigate the linkage between ESG disclosure scores and both leverage and the weighted average cost of capital (WACC). Thus, we find that firms with stronger ESG performance have higher ESG disclosure and lower leverage ratios and WACC, highlighting that firms with good ESG outcomes have better equity financing facilities and are perceived to be less risky. We also find the moderation effect where the effects of ESG disclosure depend on the level of ESG disclosure. The empirical results thus show that the environmental and social factors have significant influences on leverage and WACC than the governance factors. Furthermore, we show that firm size affects these relationships in that larger firms are more affected by the variables. These findings extend the literature on ESG, and provide relevant information for corporate financial managers, investors, and policymakers about the financial effects of ESG disclosure. This paper therefore provides evidence of the relevance of ESG factors in decisions on capital structure and cost of capital especially for large firms.

To stimulate economic growth, China has launched multiple economic stimulus plans in recent years, intensifying corporate debt financing and subsequently elevating the leverage levels. Addressing and effectively reducing the leverage levels of our country’s enterprises has emerged as a pressing issue in the trajectory of our economic development. This paper primarily investigates the drivers, pathways, and mechanisms for reversing the over-leveraged values of enterprises. Key findings include: (1) Excessive indebtedness exerts a negative impact on corporate value, with the suppressing effect intensifying as the degree of over-leverage increases; (2) Over-leveraged enterprises can effectively decrease their debt levels and enhance their value through private placement. Further research suggests that this mechanism operates by amplifying the operational leverage of over-leveraged enterprises post private placement and alleviating financing constraints, thereby elevating corporate value. (3) Compared to non-state-owned enterprises, state-owned enterprises exhibit higher levels of indebtedness. Among over-leveraged firms, enhancements in corporate governance and increased investment efficiency can positively transform corporate value. This study offers valuable insights for the ongoing supply-side structural reforms and governance guidance from the regulatory bodies.

The current study details how marketing campaigns featuring event-typical ads adapted to sporting events (e.g., a car ad that displays its brand logo on an Olympic podium) affect brand attitudes and incentive-aligned brand choice in more positive ways than proven advertising strategies such as product category consistency. Presenting four field and lab experiments across a total of 3 events and 32 ads, we show that these effects are driven by the combination of 3 mechanisms: event-typical ads’ capacity to trigger a sufficient feeling of knowing what the ad is about, provoke curiosity, and transfer attributes from the event to the brand, even with very short ad exposures. Advertisers, brand managers, or event organizers can thus exploit the creative potential around sporting events by using event-typical ads. Furthermore, when these stakeholders know the most typical elements of an event, they can either adapt their marketing activities or register them to avoid ambush marketing (i.e., advertisers willing to associate their brand with the event in the absence of any legitimate link with it).

Using the most comprehensive data set of leveraged funds known to the literature, we measure the market-wide shadow cost of leverage constraints and examine its pricing implications. The shadow cost averages 0.53% per annum from 2006 to 2016, spikes upon quarter-ends when banks face tighter capital requirements, positively predicts future betting-against-beta (BAB) returns, and negatively correlates with contemporaneous BAB returns. Stocks that experience lower returns when the shadow cost increases earn 0.85% more per month. Overall, our shadow cost measure fits the predictions of leverage-constraint-based theories better than the widely used TED spread.