Debt, equity, and capital investment

• 成果类型: Article
• 署名作者: Jackson, Scott B.; Keune, Timothy M.; Salzsieder, Leigh
• 署名单位: University of South Carolina System; University of South Carolina Columbia; University of Missouri System; University of Missouri Kansas City
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2013.09.001
• 发表日期: 2013
• 关键词: corporate-finance; leverage; depreciation; PSYCHOLOGY; decisions

摘要

Theory suggests that debt financing, relative to equity financing, makes managers reluctant to part with assets. Our evidence supports this theoretical prediction, revealing that the reluctance to part with a debt financed asset causes two decision errors-(1) participants forego investments that increase firm value and (2) participants accept investments that decrease firm value. When the source of finance is equity, participants are less likely to make either of these costly decision errors. Further, we find that higher unpaid principal accentuates participants' reluctance to part with debt financed assets. Finally, the decision errors stem, in part, from the perception that an asset having a large unpaid principal balance has provided lower past benefits than an otherwise identical asset. (C) 2013 Elsevier B.V. All rights reserved.