Seminar Series

2024 - 2025

Speaker: Tobias Berg (Goethe University).

Title: “Leverage and Risk-Taking in a Dynamic Model ”.

joint with Florian Heider (Goethe University) and Paul Voss (HEC Paris) 

Date: Thursday, 20 March at 12h00 (Paris Time).

Abstract: This paper examines the dynamic relationship between firm leverage and risk-taking. We embed the traditional agency problem of asset substitution within a multi-period model, revealing a U-shaped relationship between leverage and risk-taking, evident in data from both the U.S. and Europe. Firms with medium leverage avoid risk to preserve the option of issuing safe debt in the future. This option is valuable because safe debt does not incur the expected cost of bankruptcy, anticipated by debt-holders due to future risk-taking incentives. Our model offers new insights on the interaction between companies' debt financing and their risk profiles.  

Here is a link to the speaker’s and the FEELab website:

https://sites.google.com/view/tobias-berg

https://sites.google.com/view/feelabtbs/

You are cordially invited to participate in the following seminar of the FEELab, which will take place in Room 302, Sebastopol building.

For more information, please contact: Pierre Mella-Barral p.mella-barral@tbs-education.fr or Cam Ly TRAN cam-ly.tran@tbs-education.fr