On the modeling of Debt Maturity and Endogenous Default: A caveat ⁄

摘要: We focus on structural models in corporate flnance with roll-over debt structures the vein of Leland (1994) and Toft (1996). show that these incorrectly assume optimal default is deflned by flrst time such flrm's assets reaches a su-ciently low positive threshold must be optimally determined. characterize policy explain existing literature overestimates probability underestimates equity value.