This paper explores the impact of risky asset holdings by U.S. nonfinancial firms. From the early 1990s to 2017, the … share of risky securities surged from 28% to over 40% of firms' financial assets. Using a business-cycle heterogeneous firms … asset holdings. The model predicts that firms with higher exposure to risky assets experience an investment decline up to 50 …

the small and financially constrained firms. Our findings confirm the De Angelo et al. (2011) model predictions and …

effect varies with risk, as measured by firm time-varying distance to default. Firms with higher market valuations and lower … volatility do not suffer a debt overhang at all, while the effect is exacerbated for riskier firms. Debt overhang effects worsen …