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BEGIN:VEVENT
UID:222196a1ffee5ec3b725f36b65796009
CATEGORIES:Seminars
CREATED:20200703T093944
SUMMARY:WEBINAR: Tobias Berg - Frankfurt School of Finance & Management
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:"Leverage and Risk-Taking" with Florian Heider\nAbstract:\nContrary to the 
 prediction of static models, risk-taking is non-monotonic in leverage in dy
 namic models. If lenders rationally anticipate risk-shifting of high-levera
 ge firms, then equity-holders bear the cost of risk-shifting via higher deb
 t interest rates. The higher cost of risk-shifting makes equity holders ave
 rt risk at medium levels of leverage. Averting risk today preserves the opt
 ion to issue safe, i.e., cheap, debt tomorrow. The same friction responsibl
 e for risk-taking of high-leverage firms leads medium-leverage firms to ave
 rt risk. Our model is able to reconcile contradictory empirical results on 
 the relation between risk and leverage, predicts that firms with medium lev
 erage are subject to investment distortions, and helps explain the low-leve
 rage puzzle.\n
DTSTAMP:20260403T190549Z
DTSTART:20201112T163000Z
DTEND:20201112T173000Z
SEQUENCE:0
TRANSP:OPAQUE
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