Bank Debt, Growth Opportunities and Corporate Investment Behavior

Gong-rong Chen, Cong-min Ding () and Cheng-yin Zheng
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Gong-rong Chen: Hunan University
Cong-min Ding: Hunan University
Cheng-yin Zheng: Hunan University

Chapter Chapter 5 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 45-53 from Springer

Abstract: Abstract As one of the two major creditors of corporate debt in China, the bank has great advantages in monitoring corporate’s behavior than commercial credit creditors. So, this paper proposes that the “control effect” of the liabilities mainly comes from bank debt. To verify the above assumption, we use the data of listed firms during 2008–2010 to examine the bank debt-investment relationship. The result shows that bank debt has a negative effect on corporate investment behavior. In addition, we find the growth opportunities do have an impact to the relationship between bank debt and investment: The debt-investment relationship is significantly negative in high-growth firms, but not significant in low-growth firms.

Keywords: Bank debt; Corporate governance; Growth opportunity; Investment behavior (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-38442-4_5

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DOI: 10.1007/978-3-642-38442-4_5

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