New Perspectives on Corporate Capital Structures


The National Bureau of Economic Research invites the submission of both theoretical and empirical papers for a Symposium on "New Perspectives on Corporate Capital Structures," which will be held on April 5-6, 2013 in Cambridge, Massachusetts. This symposium is made possible by the generous support of the Alfred P. Sloan Foundation.

The global financial crisis of the last four years has focused attention on the growing use of leverage by financial intermediaries and the evolving nature of markets for corporate debt. It has also raised new questions about both the private and the social costs and benefits of leverage, in particular the role of borrowing by households and financial institutions in affecting the likelihood of, and the propagation of, systemic financial distress. At the same time, rising levels of cash-on-hand at many non-financial firms have highlighted what is sometimes called the low-leverage, or zero-leverage, puzzle at such firms.

The NBER Symposium will bring together research that bears on the role of leverage in both the financial and the non-financial sectors, with a particular emphasis on research questions and policy issues that have arisen in the aftermath of the financial crisis. While papers may not offer recommendations regarding public policy, research that informs the effects of public policy, or that bears on the design of policy, is welcome. Topics that would be suitable for research presentations at the symposium include, but are not limited to:

* Do our existing theories of capital structure help to understand recent trends in leverage at both non-financial and financial firms? Have changes in specific institutional features of debt securities, such as covenants, maturitymarket depth, or securitization, affected leverage decisions? What explains the divergent level of debt financing, and the form of that financing, between financial and non-financial firms?

* What are the social costs and benefits of leverage, and how can they be measured? Do debt securities help create efficient incentives for corporate behavior? How, if at all, does leverage affect innovation and long-term economic growth? How does the level of borrowing at financial and non-financial firms affect government revenue and systemic financial risk?

* How do various public policies, such as tax rules, regulatory capital requirements, bankruptcy codes, and extraordinary resolution authorities such as bankruptcy exemptions, regulatory forbearance, and lender-of-last-resort provisions, affect capital structure? Have these policies changed over time in ways that can explain recent patterns of financial and non-financial leverage?

* To what extent did a global shortage of safe assets in the last decade contribute to rising borrowing and attempts to create fail-safe securities by financial firms? What is the link between the shortage of safe assets and rising cash holdings by non-financial firms? In light of Modigliani and Miller theorem, what frictions might explain why non-financial corporations would have a specific demand for fail-safe securities?

* Are we measuring corporate debt appropriately? Are the metrics used for understanding non-financial corporations' debt and solvency relevant or reliable in the context of financial firms and their individual as well as systemic risks? Are there alternative metrics that could provide additional information on the capital structure of financial firms?

* How did behavioral factors, or organizational structure or associated incentive issues, affect the run-up of financial sector borrowing in the years preceding the financial crisis?

The program for the symposium will be selected by Viral Acharya (NYU and NBER, and Heitor Almeida (University of Illinois and NBER,

Completed research papers as well as detailed proposals for papers can be submitted by September 15th, 2012 at

Up to ten submissions will be selected for inclusion on the program. Authors will be notified of their selection by October 1, 2012 Papers from the symposium will be considered for submission to a potential Special Issue of the Journal of Financial Economics . All papers that are invited to be submitted for consideration to this special issue will go through the journal's regular refereeing process.

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