The desire to maintain excess borrowing capacity will tend to increase the use of debt financing in a firm's capital structure.

Name: The desire to maintain excess borrowing capacity will tend to increase the use of debt financing in a firm's capital structure.
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The desire to maintain excess borrowing capacity actually leads to a decrease in the use of debt financing in a firm's capital structure, as firms want to ensure they have the ability to borrow in the future when needed.

The Desire to Maintain Excess Borrowing Capacity Will Tend to Increase