Corporate Debt Overhang and Investment : Firm-Level Evidence
This paper investigates empirically the linkages between corporate debt overhang and investment activity at the firm level for a cross section of large-sized emerging market and developing economies. It analyzes the extent to which investment may b...
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/481931534337937622/Corporate-debt-overhang-and-investment-firm-level-evidence http://hdl.handle.net/10986/30243 |
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okr-10986-302432022-03-14T12:21:09Z Corporate Debt Overhang and Investment : Firm-Level Evidence Borensztein, Eduardo Ye, Lei Sandy CORPORATE DEBT INVESTMENT EMERGING MARKET ECONOMIES DEVELOPING ECONOMIES This paper investigates empirically the linkages between corporate debt overhang and investment activity at the firm level for a cross section of large-sized emerging market and developing economies. It analyzes the extent to which investment may be discouraged by high levels of debt that put at risk future profits, as well as firm dimensions that may sharpen the debt-investment link. Using balance sheet data from a broad set of emerging market and developing economy firms, the analysis suggests that corporate debt overhang imposes a sizable effect on investment at the firm level. This linkage is more pronounced for large firms and highly leveraged firms. The analysis also finds evidence of a nonlinear effect, in which debt overhang discourages investment more severely under high levels of indebtedness. 2018-08-15T20:23:41Z 2018-08-15T20:23:41Z 2018-08 Working Paper http://documents.worldbank.org/curated/en/481931534337937622/Corporate-debt-overhang-and-investment-firm-level-evidence http://hdl.handle.net/10986/30243 English Policy Research Working Paper;No. 8553 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
CORPORATE DEBT INVESTMENT EMERGING MARKET ECONOMIES DEVELOPING ECONOMIES |
| spellingShingle |
CORPORATE DEBT INVESTMENT EMERGING MARKET ECONOMIES DEVELOPING ECONOMIES Borensztein, Eduardo Ye, Lei Sandy Corporate Debt Overhang and Investment : Firm-Level Evidence |
| relation |
Policy Research Working Paper;No. 8553 |
| description |
This paper investigates empirically the
linkages between corporate debt overhang and investment
activity at the firm level for a cross section of
large-sized emerging market and developing economies. It
analyzes the extent to which investment may be discouraged
by high levels of debt that put at risk future profits, as
well as firm dimensions that may sharpen the debt-investment
link. Using balance sheet data from a broad set of emerging
market and developing economy firms, the analysis suggests
that corporate debt overhang imposes a sizable effect on
investment at the firm level. This linkage is more
pronounced for large firms and highly leveraged firms. The
analysis also finds evidence of a nonlinear effect, in which
debt overhang discourages investment more severely under
high levels of indebtedness. |
| format |
Working Paper |
| author |
Borensztein, Eduardo Ye, Lei Sandy |
| author_facet |
Borensztein, Eduardo Ye, Lei Sandy |
| author_sort |
Borensztein, Eduardo |
| title |
Corporate Debt Overhang and Investment : Firm-Level Evidence |
| title_short |
Corporate Debt Overhang and Investment : Firm-Level Evidence |
| title_full |
Corporate Debt Overhang and Investment : Firm-Level Evidence |
| title_fullStr |
Corporate Debt Overhang and Investment : Firm-Level Evidence |
| title_full_unstemmed |
Corporate Debt Overhang and Investment : Firm-Level Evidence |
| title_sort |
corporate debt overhang and investment : firm-level evidence |
| publisher |
World Bank, Washington, DC |
| publishDate |
2018 |
| url |
http://documents.worldbank.org/curated/en/481931534337937622/Corporate-debt-overhang-and-investment-firm-level-evidence http://hdl.handle.net/10986/30243 |
| _version_ |
1764471510540484608 |