Empirical evidence indicates that for distressed firms, higher pre-distress leverage increases the probability of operational actions (e.g., asset restructuring and employee layoffs) and financial actions (e.g., dividend cuts).This evidence is consistent with the:
A)disciplinary role of debt.
B)wasteful cuts hypothesis.
C)managerial discretion hypothesis.
D)leverage aggressiveness hypothesis.

Question

Quizplus · Accepted Answer

The Answer is A

Empirical Evidence Indicates That for Distressed Firms, Higher Pre-Distress Leverage