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Firm Expectations and Debt Growth

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  • Eiblmeier, Sebastian

Abstract

This paper explores the link between business outlook and corporate debt. Previous research has found business outlook to be a key determinant of firm investment and firm investment to be a key reason for firms to take on debt. This implies a connection between outlook and debt. Indeed, panel regressions show a tight connection between business sentiment and firms' debt growth. A mediation analysis reveals that most of this effect runs through inventories and accounts receivable, whereas for investment only a smaller effect can be found.

Suggested Citation

  • Eiblmeier, Sebastian, 2025. "Firm Expectations and Debt Growth," MPRA Paper 128296, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128296
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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