Corporate Debt Overhang and Investment : Firm-Level Evidence

Borensztein, Eduardo ; Ye, Lei Sandy

World Bank, Washington, DC

关键词: CORPORATE DEBT;    INVESTMENT;    EMERGING MARKET ECONOMIES;    DEVELOPING ECONOMIES;   

DOI  :  10.1596/1813-9450-8553
RP-ID  :  WPS8553

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper investigates empirically thelinkages between corporate debt overhang and investmentactivity at the firm level for a cross section oflarge-sized emerging market and developing economies. Itanalyzes the extent to which investment may be discouragedby high levels of debt that put at risk future profits, aswell as firm dimensions that may sharpen the debt-investmentlink. Using balance sheet data from a broad set of emergingmarket and developing economy firms, the analysis suggeststhat corporate debt overhang imposes a sizable effect oninvestment at the firm level. This linkage is morepronounced for large firms and highly leveraged firms. Theanalysis also finds evidence of a nonlinear effect, in whichdebt overhang discourages investment more severely underhigh levels of indebtedness.