Economics at your fingertips  

Debt overhang, global growth opportunities, and investment

Francesca Barbiero, Alexander Popov () and Marcin Wolski

Journal of Banking & Finance, 2020, vol. 120, issue C

Abstract: Using a pan-European data set of 8.5 million firms, we find that firms with high debt financing invest relatively more, than otherwise similar firms, if they are operating in sectors facing good global growth opportunities. The positive impact of a marginal increase in debt on investment in good-global-growth-opportunities sectors disappears if firm debt is already excessive, if it is dominated by short maturities, and during systemic banking crises. Our results are consistent with theories of the disciplining role of debt, as well as with models highlighting the negative link between firm- and bank-related agency problems and corporate investment.

Keywords: Debt overhang; Global growth opportunities; Investment; Banking crises (search for similar items in EconPapers)
JEL-codes: E22 E44 G21 H63 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
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:

DOI: 10.1016/j.jbankfin.2020.105950

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2021-10-13
Handle: RePEc:eee:jbfina:v:120:y:2020:i:c:s0378426620302120