Associate Professor Xin Xia, a researcher of the Base, has published a collaborative paper titled "Debt structure and debt overhang" in Journal of Corporate Finance

Abstract:

We study the impact of heterogeneous debt structures on corporate financing and investment decisions in a dynamic trade-off model. The issuance of bank debt along with market debt accelerates investment and mitigates the ex-post debt overhang relative to exclusive market debt structures. A growth firm optimally increases its reliance on bank debt and decreases its usage of market debt when it has fewer valuable growth opportunities, its asset volatility is higher, its bankruptcy cost is lower, or it faces a low tax rate environment. We identify the non-monotonic effects of the cyclicality of growth opportunities on firms' optimal debt composition.

Key Words: Debt structure, Corporate investment, Financing, Debt overhang 

Link: Debt structure and debt overhang - ScienceDirect

Teacher Profile

Xin Xia is a lecturer at the School of Finance, Zhongnan University of Economics and Law, majoring in corporate finance. In recent years, he has been published as the first author or the only corresponding author in Journal of Management Science, Chinese Journal of Management Science, Journal of Corporate Finance, International Review of Economics and Finance, North American Journal of Economics and Finance, Economic Modelling, Applied Economics, and has been the reviewer of several SSCI journals. His research has been supported by the PhD Innovation Program in Contemporary Economics.