The Differential Impact of Leverage on Firm Investment: Evidence From Advanced and Developing Countries

11 Pages Posted: 24 Jan 2021

See all articles by Reuben Segara

Reuben Segara

University of Sydney Business School; Financial Research Network (FIRN)

Jin Young Yang

Zayed University

Date Written: December 1, 2020

Abstract

This paper examines the differential impact of leverage on investment across firms with varying levels of growth opportunities in both advanced and developing countries. Contradictory research findings on the strength of this relationship for firms with low or high growth opportunities are reported; where even divergent results in previous studies using the same country for analysis are found. By using a multi-country framework, we confirm a negative impact of leverage on firm investment, where a stronger negative impact is consistently found for firms with low growth opportunities in both advanced and developing countries.

Keywords: Leverage; Investment; Advanced countries; Developing countries; Corporate finance

JEL Classification: G10, G30, G32

Suggested Citation

Segara, Reuben and Yang, Jin Young, The Differential Impact of Leverage on Firm Investment: Evidence From Advanced and Developing Countries (December 1, 2020). Available at SSRN: https://ssrn.com/abstract=3740420 or http://dx.doi.org/10.2139/ssrn.3740420

Reuben Segara

University of Sydney Business School ( email )

Sydney
Australia
+61 2 9351 8790 (Phone)
+61 2 9351 6461 (Fax)

HOME PAGE: http://www.sydney.edu.au/business/about/our-people/academic-staff/reuben-segara.html

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jin Young Yang (Contact Author)

Zayed University ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

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