Debt structure and debt overhang
Gan, Liu and Xia, Xin and Zhang, Hai (2022) Debt structure and debt overhang. Journal of Corporate Finance, 74. pp. 1-46. 102200. ISSN 0929-1199 (https://doi.org/10.1016/j.jcorpfin.2022.102200)
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Abstract
We study the impact of heterogeneous debt structures on corporate financing and investment decisions in a dynamic trade-off model. The issuance of bank debt along with market debt accelerates investment and mitigates the ex-post debt overhang relative to exclusive market debt structures. A growth firm optimally increases its reliance on bank debt and decreases its usage of market debt when it has fewer valuable growth opportunities, its asset volatility is higher, its bankruptcy cost is lower, or it faces a low tax rate environment. We identify the non-monotonic effects of the cyclicality of growth opportunities on firms' optimal debt composition.
ORCID iDs
Gan, Liu, Xia, Xin and Zhang, Hai ORCID: https://orcid.org/0000-0001-9319-346X;-
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Item type: Article ID code: 80681 Dates: DateEventJune 2022Published6 May 2022Published Online28 April 2022AcceptedSubjects: Social Sciences > Finance Department: Strathclyde Business School > Accounting and Finance Depositing user: Pure Administrator Date deposited: 12 May 2022 12:59 Last modified: 08 Nov 2024 01:44 URI: https://strathprints.strath.ac.uk/id/eprint/80681