Corporate debt booms, financial constraints, and the investment nexus

IF 2.3 3区 经济学 Q2 ECONOMICS
Bruno Albuquerque
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Abstract

How do corporate debt booms affect investment? Using US firm-level data over 1984Q1–2019Q4, and an instrument for firm-specific debt booms that exploits systematic differences in firms' exposure to industry-level debt booms, I find that debt booms cause investment growth to decline over the medium term. This result is driven by the financial constraints channel: Vulnerable firms experience a higher cost of debt in the short run, lower stock returns, and an increase in indicators proxying financial risk. Vulnerable firms also cut their investment spending after a debt boom, irrespective of their growth opportunities. Finally, I find that congestion effects from vulnerable firms on healthy firms are amplified during debt booms, stressing the risk that debt booms in a subset of firms may spill over to the rest of the economy.

Abstract Image

企业债务繁荣、财务约束和投资关系
企业债务繁荣如何影响投资?利用 1984 年第一季度至 2019 年第四季度的美国企业级数据,以及利用企业在行业级债务繁荣中的系统性风险差异来衡量特定企业债务繁荣的工具,我发现债务繁荣会导致投资增长在中期内下降。这一结果是由财务约束渠道驱动的:弱势企业在短期内的债务成本较高,股票回报率较低,代表财务风险的指标上升。在债务繁荣之后,弱势企业也会削减投资支出,无论其增长机会如何。最后,我发现在债务繁荣时期,脆弱企业对健康企业的拥堵效应被放大,这强调了一部分企业的债务繁荣可能会蔓延到经济的其他部分。
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来源期刊
CiteScore
3.70
自引率
4.80%
发文量
63
期刊介绍: The Journal of Applied Econometrics is an international journal published bi-monthly, plus 1 additional issue (total 7 issues). It aims to publish articles of high quality dealing with the application of existing as well as new econometric techniques to a wide variety of problems in economics and related subjects, covering topics in measurement, estimation, testing, forecasting, and policy analysis. The emphasis is on the careful and rigorous application of econometric techniques and the appropriate interpretation of the results. The economic content of the articles is stressed. A special feature of the Journal is its emphasis on the replicability of results by other researchers. To achieve this aim, authors are expected to make available a complete set of the data used as well as any specialised computer programs employed through a readily accessible medium, preferably in a machine-readable form. The use of microcomputers in applied research and transferability of data is emphasised. The Journal also features occasional sections of short papers re-evaluating previously published papers. The intention of the Journal of Applied Econometrics is to provide an outlet for innovative, quantitative research in economics which cuts across areas of specialisation, involves transferable techniques, and is easily replicable by other researchers. Contributions that introduce statistical methods that are applicable to a variety of economic problems are actively encouraged. The Journal also aims to publish review and survey articles that make recent developments in the field of theoretical and applied econometrics more readily accessible to applied economists in general.
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