The impact Debt Structure on Firm Invstments: Emprical Evidience from Turkey

The impact of leverage on investment decisions for South African firms with different growth opportunities

“…The contributions of this article can be summarised along two dimensions; Firstly, this is the first study to investigate the relationship between leverage and investment in an emerging market characterised by concentrated and high institutional shareholding. Secondly, the study uses the South African market setting to update and confirm the studies by Aygun et al (2014), Dang (2011), Franck et al (2008 and McConnell and Servaes (1995) who reported a negative relationship between leverage and investment, in support of the underinvestment theory. Our results support the underinvestment hypothesis, which says debt overhang reduces the incentives for firms to exploit valuable opportunities.…”

“…Using a sample of UK firms over the period -2003, Dang (2011 reports a significantly stronger relationship between leverage and investment for firms with high growth opportunities. Aygun et al (2014), Dang (2011), Franck et al (2008 and McConnell and Servaes (1995) On the flip side, the overinvestment theory argues that leverage reduces the overinvestment problem that can arise owing to agency problems (Aivazian et al 2005;Firth, Lin & Wong 2008). Management running the firm may have conflicting interests with shareholders, which will result in the management engaging in empire building by continuously taking on more investments to fulfil their personal interests, while destroying shareholder value (Shleifer & Vishny 1997).…”

“…However, the results are inconclusive on whether the underinvestment or overinvestment hypothesis prevails. Aygun, Suleyman and Sayim (2014), Dang (2011), Franck, Huyghebaert andHogeschool (2008) and McConnell and Servaes (1995) found evidence in support of the underinvestment hypothesis. They found leverage to be negatively related to investment and the relationship to be more significant in firms with high growth opportunities.…”

The Influence of Accounting Conservatism, Leverage, Growth Opportunities, Cash and Liquidity on Corporate Investment Among Manufacturing Companies Listed on Indonesia Stock Exchange

“…Sahid et al (2016: 83) stated that companies with high growth rates can use leverage for investment, because they have sufficient cash flow to prevent the risk of using leverage. The research conducted by Aygun, et al (2014) showed that leverage has positive and significant effect on corporate investment. This is in line with the research conducted by Bhunia (2012), whereas leverage has positive and significant effect on the investment done by small companies, while in medium and large companies, it has no significant effect.…”

“…Cash and liquidity have an influence on corporate investment, as the research results from Balogun and Ajide (2016), because when a company has a large amount of cash, it will have the opportunity to make more investments to finance their fixed assets. Aygun, et al (2014), Aivazian, et al (2005), Omet, et al (2015), and Balogun and Ajide (2016) showed that growth opportunities influence corporate investment. However, Franklin and Muthusamy's (2011) stated that growth opportunities do not affect corporate investment.…”