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| Author: | Goayl, V. K. Lehn, K. Racic, S. |
| Title: | Growth opportunities and corporate debt policy: the case of the U.S. defense industry |
| Journal: | Journal of Financial Economics
2002 : APR, VOL. 64:1, p. 35-59 |
| Index terms: | Growth theory Corporate finance Defence Armaments industry |
| Language: | eng |
| Abstract: | The U.S. defense industry provides a natural experiment for examining how changes in growth opportunities affect the level and structure of corporate debt. The authors examine how the level and structure of corporate debt changed for a sample of 61 defense firms and a a benchmark sample of 61 manufacturing firms during 1980-95, a period spanning the changes in growth opportunities. The debt levels of weapons, increased significantly as their growth opportunities declined. In addition, these firms lenghtened the maturity structure of their debt, decreased the ratio of private of public debt, and decreased the use of senior debt as their growth opportunities declined. |
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