Nonlinear Effects of Debt on Investment: Evidence from Dutch Listed Firms

Nonlinear effects of debt on investment are investigated using an unbalanced panel of 94 Dutch listed nonfinancial firms during the period 1985-2000. Evidence shows that the nonlinear relation between debt and investment can be represented by a U curve, which contradicts the financial constraints theory. One possible explanation of the U curve relation between debt and investment may be the debt capital gain in the presence of inflation.

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Year of publication:	2007
Authors:	Bo, Hong
Published in:	The European Journal of Finance. - Taylor & Francis Journals, ISSN 1351-847X. - Vol. 13.2007, 7, p. 669-687
Publisher:	Taylor & Francis Journals
Subject:	Investment-debt relation \| debt borrowing constraint \| agency costs \| debt capital gain in the presence of inflation

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005471923