n100285SE Academic Article uri icon

abstract

  • This study examines effects of pertinent features of hospital capital payment policies on hospital capital structure decisions in a oneperiod stochastic, valuemaximization model. Separate models are developed for forprofit and notforprofit hospitals. Hospital debttoassets ratios are analyzed empirically using a crosssection of data from the American Hospital Association. Although the effect on capital structure of hospital reliance on costbased reimbursement cannot be signed theoretically, in both forprofit and notforprofit cases, a higher costbased share leads to higher leverage. Factors associated with high bankruptcy risk (e.g., earnings volatility) cause hospitals to take on less debt. 1988 The American Finance Association

published proceedings

  • The Journal of Finance

author list (cited authors)

  • WEDIG, G., SLOAN, F. A., HASSAN, M., & MORRISEY, M. A.

publication date

  • January 1, 1988 11:11 AM

publisher