Grundy, B. D. and Verwijmeren, P. (2020) The external financing of investment. Journal of Corporate Finance, 65, 101745. (doi: 10.1016/j.jcorpfin.2020.101745)
Text
227262.pdf - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. 633kB |
Abstract
This paper investigates the impact of investment characteristics on the financing choice. We investigate instances of seasoned equity, bank debt, straight non-bank debt, and convertible issues by U.S. firms where the stated use of proceeds is capital expenditure and where we are able to hand-collect and classify the characteristics of the investment. Controlling for a firm's existing assets, capital structure and valuation, we document a strong empirical link between an investment's characteristics and the choice between debt and equity financing. Factor analysis indicates that the principal determinant of the financing choice is whether an investment's payoffs can be described as a hit or miss.
Item Type: | Articles |
---|---|
Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Verwijmeren, Professor Patrick |
Authors: | Grundy, B. D., and Verwijmeren, P. |
College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
Journal Name: | Journal of Corporate Finance |
Publisher: | Elsevier |
ISSN: | 0929-1199 |
ISSN (Online): | 1872-6313 |
Published Online: | 26 September 2020 |
Copyright Holders: | Copyright © 2020 The Authors |
First Published: | First published in Journal of Corporate Finance 65: 101745 |
Publisher Policy: | Reproduced under a Creative Commons License |
University Staff: Request a correction | Enlighten Editors: Update this record