Corporate Balance Sheet Restructuring and Investment in the Euro Area
AbstractThe 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 03/117.
Date of creation: 01 Jun 2003
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