Empirical evidence indicates that for distressed firms, higher pre-dis

Empirical evidence indicates that for distressed firms, higher pre-distress leverage increases the probability of operational actions (e.g., asset restructuring and employee layoffs) and financial actions (e.g., dividend cuts).

This evidence is consistent with the:
a. disciplinary role of debt.
b. wasteful cuts hypothesis.
c. managerial discretion hypothesis.
d. leverage aggressiveness hypothesis.

ANSWER

A