CONTACT INFORMATION
Office:	313A Kalkin  FIND OFFICE
Phone:	656-8273
E-Mail:	hmarble@bsad.uvm.edu
Office Hours:	Monday and Wednesday 2:00 - 3:00pm or by appointment

• BSAD 180 - Managerial Finance
  Section A, 001 Kalkin 9:30-10:45 MW - ON-LINE SYLLABUS
  Section Z1, 001 Kalkin 9:30-10:45 MW - ON-LINE SYLLABUS
   
• BSAD 181 - Intermediate Financial Management
  Section A, 110 Kalkin 12:30-1:45 MW - ON-LINE SYLLABUS
  Section Z1, 110 Kalkin 12:30-1:45 MW - ON-LINE SYLLABUS

Publication History

Working Paper

• Marble, H.; Brown, D. T. - "Investment Incentives and the Recourse Structure of Debt: Theory and Evidence" - 2009 [Show/Hide Abstract]
  Abstract: We model the choice between non-recourse secured debt and recourse debt (unsecured debt or secured debt with recourse) by firms that are sequentially acquiring assets and then making investment choices once those assets have been acquired. Non-recourse secured debt is shown to be optimal for firms engaged in the acquisition of assets that have little need for non-contractible ongoing investment. Unsecured debt provides superior post-acquisition incentives for owners of assets that require ongoing investment or that can be easily modified. The mix of recourse versus non-recourse debt of Real Estate Investment Trusts, which typically use significant amounts of non-recourse debt, is shown to be consistent with this model and with the predictions of Stulz and Johnson (1985).
  
• Marble, H. - "Anatomy of a Ratings Change" - 2009 [Show/Hide Abstract]
  Abstract: I document the frequency with which credit rating changes result from changes in the firm's operating environment versus changes in capital structure controlled by management. I find that management action plays a significant role in credit rating changes. Twenty-four percent of downgrades and 41% of upgrades have a substantial management influence. The frequency of management impact on credit ratings shows the limitations of credit risk modeling using structural models that assume constant capital structure. Even the cases in which firms are downgraded across the investment/speculative grade threshold can be driven by management actions rather than operating or economic conditions. Seventeen percent of the observations of firms newly downgraded to speculative grade are entirely attributable to management action.
  
• Marble, H.; Brown, D. T. - "Secured Debt Financing and Leverage: Theory and Evidence" - 2009 [Show/Hide Abstract]
  Abstract: Increasing financial leverage trades-off the benefits of debt (for example tax savings) against various costs including investment distortions that arise when the firm has risky debt outstanding. Recent papers show that shorter maturity debt (Johnson (2003)) and protective covenants (Billett, King and Mauer (2007)) mitigate the underinvestment problem and increase debt capacity. This paper provides a model of the simultaneous choice of a firm's leverage and the security structure of the debt (the fraction of the debt that is secured) which shows that the asset substitution problem declines with the fraction of the debt that is secured, but the fraction of the debt that is secured does not impact the underinvestment problem. An analysis of firms with data available on COMPUSTAT supports the model predictions. First, the fraction of the debt that is secured is positively and significantly related to leverage, controlling for other variables the model indicates should impact the amount of secured debt. Second, securing the debt does not increase debt capacity by mitigating the underinvestment problem. Finally, we document striking differences between secured debt financing and leasing, off-balance-sheet secured debt financing, which are consistent with the model of Eisfeldt and Rampini (2007).