Non-linearity in the impact of bankruptcy risk on leverage

Forskningsoutput: Kapitel i bok/rapport/Conference proceedingKapitel samlingsverk

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.

Detaljer

Författare
Enheter & grupper
Forskningsområden

Ämnesklassifikation (UKÄ) – OBLIGATORISK

  • Företagsekonomi
Originalspråkengelska
Titel på värdpublikationEssays on Financial Risks and the Subprime Crisis
RedaktörerEmanuel Alfranseder
UtgivningsortLund
FörlagLund University
Sidor119-137
Antal sidor19
ISBN (tryckt)978-91-7623-303-0
StatusPublished - 2015
PublikationskategoriForskning
Peer review utfördJa

Publikationsserier

NamnLund Economic Studies
FörlagLund University
Nummer188
ISSN (tryckt)0460-0029

Relaterad forskningsoutput

Alfranseder, E., 2015, 157 s.

Forskningsoutput: AvhandlingDoktorsavhandling (sammanläggning)

Visa alla (1)