Financing Decisions When Managers Are Risk Averse
This paper studies the impact of financing decisions on risk-averse managers. Leverage raises stock volatility, driving a wedge between the cost of debt to shareholders and the cost to undiversified, risk-averse managers. I quantify these "volatility costs" of debt and examine their impa...
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| Format: | Working Paper |
| Language: | en_US |
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2004
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| Online Access: | http://hdl.handle.net/1721.1/4046 |