Are Corporate Default Probabilities Consistent with the Static Tradeoff Theory?
---- Acknowledgements ----
We thank John Graham for providing corporate marginal tax rates data and Shisheng Qu and Erika Jimenez at Moody's KMV for providing data on their expected default frequency. Financial support from the FDIC Center for Financial Research is gratefully acknowledged. Armen Hovakimian gratefully acknowledges the financial support from the PSC-CUNY Research Foundation of the City University of New York. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission, the author's colleagues upon the staff of the Commission, or the National Bureau of Economic Research.