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SUMMARY:Dynamic Capital Structure and Debt Market Equilibrium
DTSTART:20261006T121500
DTEND:20261006T131500
DTSTAMP:20261006T011547Z
UID:2b753f972ad067b6917d980615fabc0c7cedc8fe2723f1a854083bf6
CATEGORIES:Conferences - Seminars
DESCRIPTION:Darius Nik-Nejad - PhD\, SFI@EPFL\nI develop a dynamic capita
 l structure framework in which many firms supply debt without commitment\,
  and debt prices are determined by market clearing. Corporate debt is not 
 a standard asset with fixed supply and exogenous cash flows. Its market va
 luation affects debt issuance\, which in turn affects aggregate debt suppl
 y\, default risk\, and the cash flows delivered by debt. The model shows h
 ow debt demand is an important determinant of leverage dynamics and the cr
 oss-sectional distribution of leverage. Importantly\, stronger debt demand
  is entirely absorbed by issuance and leads to lower long-run bond prices 
 in equilibrium. I then extend the framework to allow for imperfect substit
 utability across bonds. Credit rating segmentation generates leverage dyna
 mics around rating boundaries that are consistent with empirical evidence.
  When investors have preferred habitats\, endogenous demand and supply joi
 ntly determine maturity premia. Correlation across cash-flow shocks affect
 s the speed of leverage adjustment and can induce firms to repurchase debt
  optimally.
LOCATION:UNIL\, Extranef\, room 126
STATUS:CONFIRMED
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