Cryptocurrency exposure and the cost of debt

IF 7.4 2区经济学 Q1 BUSINESS, FINANCE

Finance Research Letters Pub Date : 2024-12-18 DOI:10.1016/j.frl.2024.106668

Li Gao, Yuan Shi, Yi Zheng

引用次数: 0

Abstract

This study examines the relationship between a company's exposure to cryptocurrency and its cost of debt. Using hand-collected data on cryptocurrency holdings for U.S. firms from 2013 to 2023, we find that firms engaged in cryptocurrency incur higher effective interest costs on their debt financing. This finding supports our hypothesis that cryptocurrency represents a high-risk investment, thereby increasing a firm's overall risk. Consequently, creditors demand higher lending costs. Given that debt financing is a crucial source of external funding, our results carry significant implications for understanding the investment behavior of public companies as they explore emerging domains like cryptocurrency.

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来源期刊

Finance Research Letters BUSINESS, FINANCE-

CiteScore

11.10

自引率

14.40%

发文量

863

期刊介绍： Finance Research Letters welcomes submissions across all areas of finance, aiming for rapid publication of significant new findings. The journal particularly encourages papers that provide insight into the replicability of established results, examine the cross-national applicability of previous findings, challenge existing methodologies, or demonstrate methodological contingencies. Papers are invited in the following areas: Actuarial studies Alternative investments Asset Pricing Bankruptcy and liquidation Banks and other Depository Institutions Behavioral and experimental finance Bibliometric and Scientometric studies of finance Capital budgeting and corporate investment Capital markets and accounting Capital structure and payout policy Commodities Contagion, crises and interdependence Corporate governance Credit and fixed income markets and instruments Derivatives Emerging markets Energy Finance and Energy Markets Financial Econometrics Financial History Financial intermediation and money markets Financial markets and marketplaces Financial Mathematics and Econophysics Financial Regulation and Law Forecasting Frontier market studies International Finance Market efficiency, event studies Mergers, acquisitions and the market for corporate control Micro Finance Institutions Microstructure Non-bank Financial Institutions Personal Finance Portfolio choice and investing Real estate finance and investing Risk SME, Family and Entrepreneurial Finance