Ibrahimo, M.V.Barros, Carlos Pestana2016-09-152016-09-152010Ibrahimo, M.V. e Carlos Pestana Barros (2010). "Capital structure, risk and asymmetric information : theory and evidence". Instituto Superior de Economia e Gestão - DE Working papers nº 05/2010/DE/UECE/CESA0874-4548http://hdl.handle.net/10400.5/12101This paper proposes a principal-agent model between banks and firms with risk and asymmetric information. A mixed form of finance to firms is assumed. The capital structure of firms is a relevant cause for the final aggregate level of investment in the economy. In the model analyzed, there may be a separating equilibrium, which is not economically efficient, because aggregate investments fall short of the first-best level. Based on European firm-level data, an empirical model is presented which validates the result of the relevance of the capital structure of firms. The relative magnitude of equity in the capital structure makes a real difference to the profits obtained by firms in the economy.engRiskAsymmetric InformationCreditCapital Structureworking paper