Construct · 1 fields · 1 citations

leverage ratchet effect: a standalone construct

One name. One construct. A landmark on the map.

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leverageratchet effect1 CONSTRUCTLeverage ratchet effectADMATI · CORPORATE FINANCE

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Corporate finance

tendency of shareholders, once debt is in place, to resist reducing leverage and to favor further borrowing because deleveraging transfers value to creditors.

In corporate finance, leverage ratchet effect refers to tendency of shareholders, once debt is in place, to resist reducing leverage and to favor further borrowing because deleveraging transfers value to creditors. This meaning comes from Admati (2017) in The Journal of Finance.[1]

Unit
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Measured by

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Nearby constructs

debt3 fields · 3 citationsjingle · one word, three carriersleverage6 fields · 15 citationsjingle · one name, six constructsplace4 fields · 7 citationsjingle · one word, four constructs

References

  1. Admati, A. R., Demarzo, P. M., Hellwig, M. F., & Pfleiderer, P. (2017). The Leverage Ratchet Effect. The Journal of Finance, 73(1), 145-198. https://doi.org/10.1111/jofi.12588

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