Tobin's Q, Debt Overhang, And Investment  

Oleh:

Hennessy, Christopher A.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 59 no. 4 (Aug. 2004), page 1717-1742.
Topik: investment; studies; investments; debt management; correlation; analysis; real option analysis
Fulltext: p 1717.pdf (158.08KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Incorporating debt in a dynamic real options framework, we show that underinvestment stems from truncation of equity's horizon at default. Debt overhang distorts both the level and composition of investment, and underinvestment being more severe for long - lived assets. An empirical proxy for the shadow price of capital to equity is derived. Use of this proxy yields a structural test for debt overhang and its mitigation through issuance of additional secured debt. Using measurement error - consistent GMM estimators, we find a statistically significant debt overhang effect regardless of firm's ability to issue additional secured debt.

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