EconPapers    
Economics at your fingertips  
 

Financing strategically: The moderation effect of marketing activities on the bifurcated relationship between debt level and firm valuation of small and medium enterprises

Sang-Joon Kim, John Bae and Hannah Oh

The North American Journal of Economics and Finance, 2019, vol. 48, issue C, 663-681

Abstract: This study argues that debt can be strategically issued by governing its interpretations from investors. In particular, we pay attention to the signaling aspects of debt financing, and conjecture that firms purposefully determine the level of debt issuance, which can affect firm valuation. Also, we argue that the bifurcated or diverged roles of debt are moderated by marketing activities, as a way to treat the stakeholders’ evaluation of the firm. This idea is empirically examined in a population of SMEs (Small- and Medium-sized Enterprises) in the U.S. stock market. Using a sample of 2174 U.S. public firms ranging from 1982 to 2010, we find resource-independent debt (called idiosyncratic debt) has diverged impacts on firm valuation and the marketing moderation of such relationship is also bifurcated.

Keywords: Debt; Firm value; Marketing activities; Signal (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062940817302449
Full text for ScienceDirect subscribers only

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:eee:ecofin:v:48:y:2019:i:c:p:663-681

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-08-10
Handle: RePEc:eee:ecofin:v:48:y:2019:i:c:p:663-681