search query: @journal_id 1275 / total: 203
reference: 170 / 203
| Author: | Spiegel, Y. Spulber, D. F. |
| Title: | Capital structure with countervailing incentives |
| Journal: | RAND Journal of Economics
1997 : SPRING, VOL. 28:1, p. 1-24 |
| Index terms: | CAPITAL STRUCTURE OF COMPANIES INCENTIVES SIGNALING |
| Language: | eng |
| Abstract: | The capital structure of regulated firms is a key determinant of regulated rates. Under cost-of-service regulation and price-cap regulation commissions set regulated rates so as to ensure firms a "fair" rate of return of their equity. Regulated firms have an incentive to choose their capital structure in anticipation of its effect on their rates. Countervailing incentives lead low- and high-cost firms to choose the same capital structure in equilibrium when the firm's investment is large. The model may admit separating equilibria in which high-cost firms issue greater equity and low-cost firms rely on debt financing, when investment is small or medium-sized. |
SCIMA