Non-linearity in the impact of bankruptcy risk on leverage

Research output: Chapter in Book/Report/Conference proceedingBook chapter

Standard

Non-linearity in the impact of bankruptcy risk on leverage. / Alfranseder, Emanuel; Asgharian, Hossein.

Essays on Financial Risks and the Subprime Crisis. ed. / Emanuel Alfranseder. Lund : Lund University, 2015. p. 119-137 (Lund Economic Studies; No. 188).

Research output: Chapter in Book/Report/Conference proceedingBook chapter

Harvard

Alfranseder, E & Asgharian, H 2015, Non-linearity in the impact of bankruptcy risk on leverage. in E Alfranseder (ed.), Essays on Financial Risks and the Subprime Crisis. Lund Economic Studies, no. 188, Lund University, Lund, pp. 119-137.

APA

Alfranseder, E., & Asgharian, H. (2015). Non-linearity in the impact of bankruptcy risk on leverage. In E. Alfranseder (Ed.), Essays on Financial Risks and the Subprime Crisis (pp. 119-137). (Lund Economic Studies; No. 188). Lund: Lund University.

CBE

Alfranseder E, Asgharian H. 2015. Non-linearity in the impact of bankruptcy risk on leverage. Alfranseder E, editor. In Essays on Financial Risks and the Subprime Crisis. Lund: Lund University. pp. 119-137. (Lund Economic Studies; 188).

MLA

Alfranseder, Emanuel and Hossein Asgharian "Non-linearity in the impact of bankruptcy risk on leverage". Alfranseder, Emanuel (ed.). Essays on Financial Risks and the Subprime Crisis. Lund Economic Studies; 188. Lund: Lund University. 2015, 119-137.

Vancouver

Alfranseder E, Asgharian H. Non-linearity in the impact of bankruptcy risk on leverage. In Alfranseder E, editor, Essays on Financial Risks and the Subprime Crisis. Lund: Lund University. 2015. p. 119-137. (Lund Economic Studies; 188).

Author

Alfranseder, Emanuel ; Asgharian, Hossein. / Non-linearity in the impact of bankruptcy risk on leverage. Essays on Financial Risks and the Subprime Crisis. editor / Emanuel Alfranseder. Lund : Lund University, 2015. pp. 119-137 (Lund Economic Studies; 188).

RIS

TY - CHAP

T1 - Non-linearity in the impact of bankruptcy risk on leverage

AU - Alfranseder, Emanuel

AU - Asgharian, Hossein

PY - 2015

Y1 - 2015

N2 - 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.

AB - 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.

M3 - Book chapter

SN - 978-91-7623-303-0

T3 - Lund Economic Studies

SP - 119

EP - 137

BT - Essays on Financial Risks and the Subprime Crisis

A2 - Alfranseder, Emanuel

PB - Lund University

CY - Lund

ER -