BAFI & OPER Seminar-Ritchken Wu | Weatherhead School at Case Western Reserve University

BAFI & OPER Seminar-Ritchken Wu

Capital Structure with Asset Flexibility

We study the impact of asset flexibility on the design of an optimal capital structure in a dynamic model where the firm has multiple debt issues and equityholders choose the timing and financing of future growth options as well as the operating policy of assets in place. We show that all things being equal, profitable firms with flexible assets exercise their growth options earlier, use less debt and will typically be less leveraged than otherwise identical firms with no asset flexibility. When asset flexibility allows risk shifting possibilities, growth options are exercised even earlier and leverage is even lower. The very lowest leverage firms are those with profitable flexible assets and large and relatively inexpensive growth options.

Fee: [Yes/No/Varies]

Contact Information:
Tedda Nathan
Dept. Administrator
(216) 368-2040 (Tel)
(216) 368-6249 (Fax)

Thursday, Oct. 29, 2015 from 1:30 p.m. to 3 p.m.
Peter B. Lewis Building Room 220
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Peter Ritchken
Ritchken, Wu paper


Related Events

Loading events…

For undergraduate programs: learn more information here or apply now. For graduate programs: request more information or apply now. You can also register for one of over 70 open enrollment courses through Executive Education.

Weatherhead School of Management at Case Western Reserve University cultivates creativity, innovation, and purpose-driven leadership to design a better world.