Research output per year
Research output per year
Abstract
The paper investigates the effect of bankruptcy risk on firms’ financing decisions. More specifically, we analyze if a higher probability of bankruptcy reduces incentives for debt financing due to an increase in expected bankruptcy cost. We argue that an increase in bankruptcy risk affects financial decisions only when the probability of bankruptcy is sufficiently high. We therefore model a nonlinear relationship between changes in leverage and bankruptcy risk. Our findings show that an increase in bankruptcy risk has a negative impact on changes in leverage and the impact is clearly nonlinear.
| Original language | English |
|---|---|
| Title of host publication | Essays on Financial Risks and the Subprime Crisis |
| Editors | Emanuel Alfranseder |
| Place of Publication | Lund |
| Publisher | Lund University |
| Pages | 119-137 |
| Number of pages | 19 |
| ISBN (Print) | 978-91-7623-303-0 |
| Publication status | Published - 2015 |
Publication series
| Name | Lund Economic Studies |
|---|---|
| Publisher | Lund University |
| Number | 188 |
| ISSN (Print) | 0460-0029 |
Subject classification (UKÄ)
- Business Administration
Fingerprint
Dive into the research topics of 'Non-linearity in the impact of bankruptcy risk on leverage'. Together they form a unique fingerprint.Research output
- 1 Doctoral Thesis (compilation)
-
Essays on Financial Risks and the Subprime Crisis
Alfranseder, E., 2015, 157 p.Research output: Thesis › Doctoral Thesis (compilation)