Giulio Trigilia
Institution
University of Rochester, Simon School
PhD Year
2016
giulio.trigilia@simon.rochester.edu
FTG Membership
Member
Website
https://sites.google.com/view/giulio-trigilia/home
Featured Work
Jul 12, 2023
Short-term debt overhang
We show that short-term debt in a firm’s optimal capital structure reduces investment under asymmetric information. Investors’ interpretation of underinvestment as a positive signal about the quality of the assets in place allows the equity holders to profit from short-term debt repricing at the rollover stage. Thus, underinvestment is more pronounced at shorter maturities, in contrast to Myers (1977). Low types’ incentives to mimic put...
