Leverage constraints and corporate financing decisions

Liu Yang and Qing Zhou

Accounting and Finance, 2021, vol. 61, issue 4, 5199-5230

Abstract: We examine the impact of investors’ leverage constraints on corporate financing decisions. We use mutual fund flow to capture the net buying pressure from leverage‐constrained investors’ demand for high‐beta stocks. We show that firms confronted by the constrained funds’ excessive trading pressure are more likely to issue a seasoned equity offering and conduct stock‐based mergers and acquisitions, and their managers engage in more insider sales than those facing low or little trading pressure. Our results are robust to controlling for the short‐sales constraints of mutual funds and are consistent across different stages of the business cycle.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/acfi.12754

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:61:y:2021:i:4:p:5199-5230

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().