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Debt Overhang, Gazelles’ Growth, and Fiscal Policy: A Note from the Quantile Regression Approach

Sorin Anton (), Mihaela Onofrei (), Emilia Gogu (), Bogdan Constantin Neculau () and Florin Mihai ()
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Mihaela Onofrei: Finance, Money and Public Administration Department, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iași, 700506 Iași, Romania
Emilia Gogu: Statistics and Econometrics Department, Faculty of Economic Cybernetics, Statistics and Informatics, Bucharest University of Economic Studies, 010552 București, Romania
Bogdan Constantin Neculau: Faculty of Psychology and Educational Sciences, Alexandru Ioan Cuza University of Iași, 700506 Iași, Romania
Florin Mihai: Management Information Systems Department, Faculty of Accounting Management Information Systems, Bucharest University of Economic Studies, 010552 București, Romania

Sustainability, 2021, vol. 13, issue 18, 1-10

Abstract: The paper aims to examine the relationship between leverage and firm growth and the impact of fiscal policy on this relationship using a panel data quantile regression approach. Employing a sample of gazelles from emerging Europe for the 2006–2014 period, we find that debt overhang negatively affects firm growth only for the lower growth quantiles. In addition, we found that the negative effect is higher for the gazelles located in countries with lower corporate income effective tax rates. However, for the higher growth quantiles, the impact of debt on firm growth is positive and statistically significant. Our results reconcile the mixed results of the previous studies and have practical implications for financing strategies in emerging markets.

Keywords: leverage; sales growth; gazelles; emerging economies; fiscal policy; quantile regression (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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