(Debt) Overhang: Evidence from Resource Extraction

• 成果类型: Article
• 署名作者: Wittry, Michael D.
• 署名单位: University System of Ohio; Ohio State University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa070
• 发表日期: 2021
• 页码: 1699
• 关键词: GROWTH OPPORTUNITIES; corporate-debt; AGENCY COSTS; INVESTMENT; maturity; leverage; liquidity; determinants; RISK; firm

摘要

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.