Debt structure and future financing and investment
Description
I study the relation between firm debt structure and future external financing and investment. I find that greater reliance on long-term debt is associated with increased access to external financing and ability to undertake profitable investments. This contrasts with previous empirical results and theoretical predictions from the agency cost literature, but it is consistent with predictions regarding rollover risk. Furthermore, I find that firms with lower total debt (high debt capacity) have greater access to new financing and investment. Lower leverage increases future debt issues and capital expenditures, and firms do not fully rebalance by reducing the use of external financing sources such as equity. Finally, my results support the view that greater reliance on unsecured debt can increase future debt financing. Overall, my paper offers new insights into how aspects of debt structure, in particular maturity, are related ex-post to firms' ability to raise new financing and invest.
Date Created
The date the item was original created (prior to any relationship with the ASU Digital Repositories.)
2017
Agent
- Author (aut): Flynn, Sean Joseph
- Thesis advisor (ths): Tserlukevich, Yuri
- Committee member: Hertzel, Mike
- Committee member: Stein, Luke
- Publisher (pbl): Arizona State University