Data Update 7 For 2026: Debt And Taxes

Aswath Damodaran15.02K FollowersFollow5ShareSavePlay(35min)CommentsSummaryIn this session, I start with an examination of the trade-off that all businesses face when it comes to choosing between debt and equity to fund their operations and then look at the debt choices that companies made in 2025.One of the most common reasons that I hear business owners and CFOs of even large companies give for borrowing money is that debt is cheaper than equity.While the low defaults in 2025 were a positive sign for lenders, especially given the economic turmoil created by tariffs and trade wars, there were some worrying trends as well.The AI investing boom enters the financing storyline, which is the focus for this post, because it needs immense amounts of capital.

Getty Images In my fifth data update, I examined hurdle rates in 2025, and in my sixth data update, I looked at the profitability and return metrics for firms. Both hurdle rates and profitability metrics can be affected byThis article was written byAswath Damodaran15.02K FollowersFollowI teach corporate finance and valuation at the Stern School of Business at New York University. I am a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. As a result, I happen to be at the intersection of three businesses, education, publishing and financial services, that are all big, inefficiently run and deserve to be disrupted. I may not have the power to change the status quo in any of these businesses, but I can stir the pot. Please note that the article that you are reading here was originally written on my blog and is republished in Seeking Alpha and other forums. Consequently, I neither track nor respond to comments here. I am sorry! ==Editors' Note: Seeking Alpha monitors Dr. Damodaran blog and posts relevant articles on his behalf.