Heterogeneity in Investment Spike Financing
Financial Intermediation Research Society Conference 2017; FMA Annual Meeting 2017; FMA European Meeting 2017; AsFA Annual Meeting 2017; PKU-NUS Conference 2017; Australasian Finance and Banking Conference 2014
59 Pages Posted: 20 Jul 2014 Last revised: 1 Feb 2020
Date Written: January 31, 2020
Abstract
This article presents one of the most comprehensive studies to date to employ filtering techniques to distinguish between routine and "investment spike" financing. This study documents significant heterogeneity in investment spike financing, particularly by firm size. Further, when spike size or pre-investment leverage is larger, unlike large firms, small firms issue less equity. These results suggest that small firms' financing patterns around investment spikes are consistent with the reverse pecking order prediction (e.g., Fulghieri and Lukin, 2001) and the dynamic trade-off theory (e.g., DeAngelo, DeAngelo, and Whited, 2011).
Keywords: Capital Structure, Corporate Finance, Lumpy Investment, Investment Spikes
JEL Classification: G31, G32, G34, E22
Suggested Citation: Suggested Citation