Nonlinear Effects of Debt on Investment: Evidence from Dutch Listed Firms

The European Journal of Finance, 2007, vol. 13, issue 7, 669-687

Abstract: Nonlinear effects of debt on investment are investigated using an unbalanced panel of 94 Dutch listed nonfinancial firms during the period 1985-2000. Evidence shows that the nonlinear relation between debt and investment can be represented by a U curve, which contradicts the financial constraints theory. One possible explanation of the U curve relation between debt and investment may be the debt capital gain in the presence of inflation.

Keywords: Investment-debt relation; debt borrowing constraint; agency costs; debt capital gain in the presence of inflation (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13518470701322300 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:13:y:2007:i:7:p:669-687

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REJF20

DOI: 10.1080/13518470701322300

Access Statistics for this article

The European Journal of Finance is currently edited by Chris Adcock

More articles in The European Journal of Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().