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| Author: | Bo, H. |
| Title: | Nonlinear effects of debt on investment: Evidence from Dutch listed firms |
| Journal: | European Journal of Finance
2007 : OCT/DEC, VOL. 13:7-8, p. 669-687 |
| Index terms: | financial markets capital debt borrowing investment inflation models listed companies Netherlands |
| Language: | eng |
| Abstract: | This study examines nonlinear (hereafter as: n-l.) effects of debt on investment using an unbalanced panel of over 90 Dutch listed nonfinancial firms from 1985 to 2000. It is shown that the n-l. relation btw. debt and investment can be represented by a U curve, contradicting the financial constraints theory. One possible explanation of the U curve relation may be the debt capital gain in the presence of inflation. |
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