ISSN:
1573-7179
Keywords:
debt level
;
free cash flows
;
investment opportunity set
;
firm size
;
corporate debt policy
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract This study, based on a sample of 1869 observations from 1989 to 1993 for non-regulated U.S. firms, examines the association between investment opportunity set (IOS), free cash flows (FCF) and debt, and also tests whether firm size acts as a moderating variable on this association. The results show that there is a significantly positive association between FCF and debt for low IOS firms, which provide support to Jensen's (1986) “control hypothesis”. The results also show that the positive association between debt and high FCF for low IOS firms is more pronounced for large firms, suggesting that the firm size serves as a moderating variable on the association.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1008354509316
