Corporate Balance Sheet Restructuring and Investment in the Euro Area
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
The recent boom-bust cycle in the euro area's equity valuations has left nonfinancial corporations saddled with a legacy of high debt or leverage. Models of corporate investment behavior based on imperfect capital markets predict that highly leveraged balance sheets can act as a brake on investment spending. The paper's empirical analysis suggests that leverage effects on corporate investment can be substantial and persistent, particularly if leverage exceeds threshold values.
Series:
Working Paper No. 2003/117
Subject:
Business enterprises Corporate finance Corporate investment Economic sectors Financial institutions Financial statements National accounts Public financial management (PFM) Stocks
English
Publication Date:
June 1, 2003
ISBN/ISSN:
9781451854039/1018-5941
Stock No:
WPIEA1172003
Pages:
24
Please address any questions about this title to publications@imf.org