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Leverage, Growth Opportunities and Firm Investment: The Case of Manufacturing Firms in China

Date created
2014-12
Authors/Contributors
Author: Sheng, Di
Author: Hou, Shuyang
Abstract
This paper examined the impact of financial leverage on investment decisions offirms using the panel data of publicly traded Chinese firms. We collected data for511 manufacturing companies during the period from 2005 to 2013 to do theresearch. The data shows that financial leverage is negatively correlated with afirm’s investment. Moreover, after we categorized the data into two types: 1)high-growth firms and 2) low-growth firms, it demonstrated that such negativecorrelation is significant for low-growth firms while insignificant for high-growthfirms. Additionally, long-term debt has a more significant negative correlation toinvestment than short-term debt.
Document
Description
MSc in Finance Project-Simon Fraser University
Copyright statement
Copyright is held by the author(s).
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You are free to copy, distribute and transmit this work under the following conditions: You must give attribution to the work (but not in any way that suggests that the author endorses you or your use of the work); You may not use this work for commercial purposes.
Scholarly level
Peer reviewed?
No
Language
English

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