Long-Term Debt and the Value of the Firm,Evidence from International Listed Manufacturing Firms

Nicholas Apergis () and John Sorros ()
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John Sorros: University of Piraeus, Greece

Review of Economics & Finance, 2011, vol. 1, 60-72

Abstract: The goal of this study is to investigate the impact of long-term debt on the value of the firm for international listed manufacturing firms. The testing period is based on quarterly data from 1999 to 2009, while 346 internationally listed firms are employed. The methodologies are those of panel co-integration and panel causality. The empirical findings show that long-term leverage obligations have a negative and statistically significant impact on the value of the firm. The impact, however, is differentiated with respect to the size of the firm as well as with the type of long-term investment the long-term debt is spent. The implications are crucial, since managers may manipulate such leverage funds in such a manner that they do not satisfy the long-run fixed capital investment objectives of the firm.

Keywords: Long-term debt; International manufacturing firms; Value of the firm; Panel co-integration (search for similar items in EconPapers)
JEL-codes: C33 G10 M41 (search for similar items in EconPapers)
Date: 2011
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