Debt Financing and the Failure of Innovation Companies: The Application of the CHS Model in US Stock Markets

Nguyen Quang My N. Q. M., Sayim M., Rahman H.

GLOBAL ECONOMIC REVIEW, cilt.48, sa.2, ss.180-212, 2019 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 48 Sayı: 2
  • Basım Tarihi: 2019
  • Doi Numarası: 10.1080/1226508x.2019.1588767
  • Dergi Adı: GLOBAL ECONOMIC REVIEW
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.180-212
  • Anahtar Kelimeler: Bankruptcy risk, CHS model, debt financing, financial leverage, equity financing, RESEARCH-AND-DEVELOPMENT, DISTRESS, PREDICTION, RISK, CONSTRAINTS, BANKRUPTCY, MOMENTUM, GROWTH, RATIOS
  • Marmara Üniversitesi Adresli: Hayır

Özet

This study aims to determine whether increasing a firm's leverage significantly changes its level of bankruptcy risk in the innovative industry by using the CHS model [Campbell, J. Y., J. Hilscher, and J. Szilagyi. 2008. "In Search of Distress Risk." The Journal of Finance 63 (6): 2899-2939] to test 395 American innovation companies. These companies are categorised into four groups based on their debt ratios and their performance on the NYSE and NASDAQ stock exchanges is analysed in three separate periods. The findings reveal that innovation companies with a higher debt level are no riskier than those with a lower debt level.