Abstract
This study examines the effect of corporate debt dependence on the differential impact of the sub-prime mortgage crisis on corporate performance. We find that the higher the debt dependence the greater the decrease in corporate performance from the pre-crisis to the crisis period. For high-debt firms, we find that the higher the new debt borrowed during the crisis period, the lower the corporate performance. However, we find no significant relation between new debt borrowed and corporate performance for low debt firms during the crisis period.
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Adjei, F. Debt dependence and corporate performance in a financial crisis: evidence from the sub-prime mortgage crisis. J Econ Finan 36, 176–189 (2012). https://doi.org/10.1007/s12197-010-9140-0
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DOI: https://doi.org/10.1007/s12197-010-9140-0