Government Loan Guarantees and the Failure of the Canadian Northern Railway
用金融理论的最优资本结构模型分析加拿大北方铁路的失败，发现政府贷款担保导致破产概率高达约70%，并促使铁路发起人用几乎全部债务融资一个事前无利可图的项目。
The failure of the Canadian Northern Railway is analyzed with a model of optimal capital structure drawn from finance theory. Ex ante bankruptcy probabilities, which are computed on the basis of different assumptions about investors' expectations, range from 40 to 90 percent; and our best estimate is about 70 percent. These high probabilities were a consequence of loan guarantees provided to the Canadian Northern by the federal and provincial governments. The guarantees induced the railway's promoters to undertake an ex ante unprofitable project and to finance that project almost exclusively with debt.