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We investigate how the level of corporate leverage affects firms' investment response to monetary policy shocks. Based … investment demand more strongly after a contractionary shock, the price of capital declines sharply, which incentivizes all firms … regardless of their leverage to invest relatively more, muting the aggregate decline of investment. We provide empirical evidence …
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. While both types of policy tightening diminish French firms’ investment, the transmission of conventional monetary policy … investment more for firms with higher bond shares of total debt. We further investigate the transmission channels and show that …
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We offer evidence of a new stylized feature of corporate financing decisions: the tendency of managers to rely more on debt financing when earnings prospects are poor. We term this 'leaning against the wind' and consider three possible explanations: market timing, precautionary financing, and...
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