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Real Asset Liquidity, Cash Holdings, and the Cost of Corporate Debt∗
| Content Provider | Semantic Scholar |
|---|---|
| Author | Nejadmalayeri, Ali Usman, Adam Shehu |
| Copyright Year | 2017 |
| Abstract | We show analytically that there exists a nonlinear (U-shaped) relationship between credit spreads and the liquidity of the market for a firm’s real assets. We empirically verify that indeed there is an interior optimum level of market liquidity at which credit spreads are at their lowest. Our results are particularly pronounced for highly leveraged firms and firms with large growth options. We further find that cash holdings affect the influence of real asset liquidity on credit spreads. However, this interaction between cash holdings and real asset liquidity is only significant in circumstances in which real asset |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.fmaconferences.org/Boston/Csprd_AssetLiq.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
