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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have