This paper analyzes whether the financial distress of a firm affects the investment decisions of non … the industry and hence restricting credit access and investment. These average negative effects continue to hold in the …

We propose a model that jointly determines the capital structure and investment decisions taking business cycle and … triggers of investment, disinvestment, and default, which depend on the state of the economy. The level of investment triggers … sensitivity also dffers depending on the reversibility of the investment. The optimal leverage ratio is countercyclical, and the …

distressed if it breached the minimum capital requirements set by law. The results demonstrate that all the investment …-related factors matter for financial distress, with timing, intensity, sector, and type of investment all playing a role. Furthermore …, the data seem to suggest that investment in tangibles is more cycle-sensitive for the transport and construction and real …