(a)
The two articles “Debt is Good for You" and “Debtors’ Prison" explore the use of debt financing by corporations and contrast it to equity financing, as well as investigate the implications of excess borrowing.
“Debt is Good for You" discusses debt and equity financing by providing a brief overview of the scientific research in this area. It uses the paper by Modigliani and Miller, who claimed that the proportions of equity and debt have no effect on the firm’s value, as a reference point for further discussion and shows the evolution of the theory related to company financing. In ...