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  1. Working Paper

    Conference paper

    Debt Overhang and Capital Regulation

    By Anat Admati, Peter M. DeMarzo, Martin Hellwig, and Paul Pfleiderer

    Apr 2012

    We analyze shareholders’ incentives to change the leverage of a firm that has already borrowed substantially. As a result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer.