Does financial flexibility reduce investment distortions?

Journal of Financial Research

Volumn 35, Issue 2, 2012, Pages 243-259

  de Jong, Abe ^a,b   Verbeek, Marno ^a   Verwijmeren, Patrick ^c,d,e  

^a ERASMUS UNIVERSITY   (Netherlands)

^b UNIVERSITY OF GRONINGEN   (Netherlands)

^c UNIVERSITY OF AMSTERDAM   (Netherlands)

^d TINBERGEN INSTITUTE   (Netherlands)

^e UNIVERSITY OF GLASGOW   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84861769195     PISSN: 02702592     EISSN: 14756803     Source Type: Journal    
DOI: 10.1111/j.1475-6803.2012.01316.x     Document Type: Article

References (30)

1. Adam, T., and V. K. Goyal, 2008, The investment opportunity set and its proxy variables, Journal of Financial Research 31, 41-63.
2. Almeida, H., and T. Philippon, 2007, The risk-adjusted cost of financial distress, Journal of Finance 62, 2557-86.
3. Altman, E. I., and H. A. Rijken, 2004, How rating agencies achieve rating stability, Journal of Banking and Finance 28, 2679-2714.
4. Ashbaugh-Skaife, H., D. W. Collins, and R. LaFond, 2006, The effects of corporate governance on firms' credit ratings, Journal of Accounting and Economics 42, 203-43.
5. Chang, X., Y. Chen, and S. Dasgupta, 2009, Debt reclassifications and rollover: Determinants and real impact, Working Paper, Hong Kong University of Science and Technology.
6. Chava, S., and M. R. Roberts, 2008, How does financing impact investment? The role of debt covenants, Journal of Finance 63, 2085-2121.
7. DaDalt, P. J., J. R. Donaldson, and J. L. Garner, 2003, Will any Q do? Journal of Financial Research 26, 535-51.
8. Daniel, N. D., D. J. Denis, and L. Naveen, 2008, Sources of financial flexibility: Evidence from cash flow shortfalls, Working Paper, Purdue University
9. DeAngelo, H., and L. DeAngelo, 2007, Capital structure, payout policy, and financial flexibility, Working Paper, University of Southern California
10. Denis, D., and S. B. McKeon, 2010, Debt financing and financial flexibility: Evidence from pro-active leverage increases, Working Paper, Purdue University
11. Deshmukh, S., and S. Vogt, 2005, Investment, cash flow, and corporate hedging, Journal of Corporate Finance 11, 628-44.
12. Fama, E. F., and K. R. French, 2001, Disappearing dividends: Changing firm characteristics or lower propensity to pay? Journal of Financial Economics 60, 3-43.
13. Faulkender, M., and M.A. Petersen, 2006, Does the source of capital affect capital structure? Review of Financial Studies 19, 45-79.
14. Gamba, A., and A. J. Triantis, 2008, The value of financial flexibility, Journal of Finance 63, 2263-96.
15. Gourieroux, C., A. Monfort, E. Renault, and A. Trognon, 1987, Generalised residuals, Journal of Econometrics 34, 5-32.
16. Graham, J., 2000, How big are the tax benefits of debt? Journal of Finance 55, 1901-1941.
17. Graham, J., and C. Harvey, 2001, The theory and practice of corporate finance: Evidence from the field, Journal of Financial Economics 60, 187-243.
18. Grinblatt, M., and S. Titman, 2002, Financial Markets and Corporate Strategy (Irwin McGraw-Hill, Boston, MA ).
19. Heckman, J., 1979, Sample selection bias as a specification error, Econometrica 47, 153-61.
20. Hovakimian, A., T. Opler, and S. Titman, 2001, The debt-equity choice, Journal of Financial and Quantitative Analysis 36, 1-24.
21. Kisgen, D. J., 2006, Credit ratings and capital structure, Journal of Finance 61, 1035-72.
22. Marchica, M., and R. Mura, 2010, Financial flexibility, investment ability, and firm value, Financial Management 39, 1339-65.
23. Mauer, D. C., and A. J. Triantis, 1994, Interactions of corporate financing and investment decisions: A dynamic framework, Journal of Finance 49, 1253-77.
24. Minton, B., and K. Wruck, 2001, Financial conservatism: Evidence on capital structure from low leverage firms, Working Paper, Ohio State University.
25. Molina, C. A., 2005, Are firms underleveraged? An examination of the effect of leverage on default probabilities, Journal of Finance 60, 1427-58.
26. Myers, S. C., J. McConnell, A. Peterson, D. Soter, and J. Stern, 1998, Vanderbilt University roundtable on the capital structure puzzle, Journal of Applied Corporate Finance 11, 8-24.
27. Petersen, M. A., 2009, Estimating standard errors in finance panel data sets: Comparing approaches, Review of Financial Studies 22, 435-80.
28. Standard & Poor's, 2006a, Annual 2005 Global corporate default study and ratings transitions.
29. Standard & Poor's, 2006b, Corporate ratings criteria.
30. Stiglitz, J. E., and A. Weiss, 1981, Credit rationing in markets with imperfect information, American Economic Review 71, 393-410.