Abstract
Immediate cash needs are the primary motive for net debt issuances and a highly important motive for net equity issuances. Net debt issuers immediately spend almost all of the proceeds, but net equity issuers save most of the proceeds. Conditional on issuing a security, corporate lifecycle, precautionary saving, market timing, and static tradeoff theories are important in explaining the debt versus equity choice, even for firms that are running out of cash.
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