Dynamical Corporate Finance: An Equilibrium Approach

The way in which leverage and its expected dynamics impact on firm valuation is very different from what is assumed by the traditional static capital structure framework. Recent work that allows the firm to restructure its debt over time proves to be able to explain much of the observed cross—sectional and time—series variation in leverage, while static capital structure predictions do not. The purpose of this book is to re—characterize the firm’s valuation process within a dynamical capita...