(Debt) Overhang: Evidence from Resource Extraction

Autor:	Michael D. Wittry
Rok vydání:	2020
Předmět:	Debt overhang Economics and Econometrics Ex-ante Accounting Debt media_common.quotation_subject Economics Monetary economics Investment opportunities Investment (macroeconomics) Natural resource Finance media_common
Zdroj:	The Review of Financial Studies. 34:1699-1746
ISSN:	1465-7368 0893-9454
DOI:	10.1093/rfs/hhaa070
Popis:	I study the empirical importance of debt overhang using a unique data set on resource extraction firms that provides ex ante measures of investment opportunities and important variation in terms of a firm’s obligations. In particular, unsecured reclamation liabilities create overhang that is costly to resolve and induces firms to forgo and postpone positive NPV investments. Traditional debt, in contrast, imposes few overhang-related investment distortions. These results show that (a) the overhang problem is potentially large and more broadly applies to firms’ nondebt liabilities and (b) overhang problems associated with traditional debt can be avoided through contracting and debt composition.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::2373bed53e495035b213d6ff1a6b5707 https://doi.org/10.1093/rfs/hhaa070 Zobrazit plný text záznamu