QUESTION 9 Suppose that a reform improves the quality of courts which suddenly reduces the costs of bankruptcy for firms. What would be the empirical findings consistent with the trade-off theory of capital structure? Firms not subject to corporate taxes issue additional debt after the reform The debt ratio of firms increases following the reform Firms not subject to corporate taxes do not change their leverage ratio after the reform The debt-to-equity ratio of firms is unaffected by the reform The debt ratio of firms decreases following the reform