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

See all articles by Hyun Joong Im

Hyun Joong Im

The University of Seoul

Colin Mayer

University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Oren Sussman

European Corporate Governance Institute (ECGI)

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

Im, Hyun Joong and Mayer, Colin and Sussman, Oren, Heterogeneity in Investment Spike Financing (January 31, 2020). 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, Available at SSRN: https://ssrn.com/abstract=2468424 or http://dx.doi.org/10.2139/ssrn.2468424

Hyun Joong Im

The University of Seoul ( email )

163 Seoulsiripdae-ro
Dongdaemun-gu
Seoul, 02504
Korea, Republic of (South Korea)
+82-2-6490-2268 (Phone)
+82-2-6490-2219 (Fax)

Colin Mayer (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288112 (Phone)
+44 1865 288805 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Oren Sussman

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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