Ambiguity and the Tradeoff Theory of Capital Structure

Ambiguity and the Tradeoff Theory of Capital Structure

We examine the impact of ambiguity, or Knightian uncertainty, on the capital structure decision, using a static tradeoff theory model in which agents are both ambiguity and risk averse. The model confirms the well-known result that greater risk—the uncertainty over outcomes—leads firms to decrease l...

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Bibliographic Details
Main Authors: Izhakian, Y. (Author), Yermack, D. (Author), Zender, J.F (Author)
Format: Article
Language:English
Published: INFORMS Inst.for Operations Res.and the Management Sciences 2022
Subjects:
Ambiguity averse
Ambiguity aversion
Ambiguity index
Ambiguity measure
Capital structure
Capital Structure
Decision theory
Knightian uncertainty
Leverage
Operations research
Perceived probabilities
Perceived probability
Theory model
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