Debt Overhang, Gazelles’ Growth, and Fiscal Policy: A Note from the Quantile Regression Approach

The paper aims to examine the relationship between leverage and firm growth and the impact of fiscal policy on this relationship using a panel data quantile regression approach. Employing a sample of gazelles from emerging Europe for the 2006–2014 period, we find that debt overhang negatively affect...

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Bibliographic Details
Published in:Sustainability 2021-09, Vol.13 (18), p.10457
Main Authors: Anton, Sorin Gabriel, Onofrei, Mihaela, Gogu, Emilia, Neculau, Bogdan Constantin, Mihai, Florin
Format: Article
Language:English
Subjects:
Capital expenditures
Developing countries
Economic growth
Emerging markets
Entrepreneurship
Fiscal policy
Gazella
International finance
LDCs
Literature reviews
Public policy
Small & medium sized enterprises-SME
Statistical analysis
Taxation
Transition economies
Variables
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Summary:The paper aims to examine the relationship between leverage and firm growth and the impact of fiscal policy on this relationship using a panel data quantile regression approach. Employing a sample of gazelles from emerging Europe for the 2006–2014 period, we find that debt overhang negatively affects firm growth only for the lower growth quantiles. In addition, we found that the negative effect is higher for the gazelles located in countries with lower corporate income effective tax rates. However, for the higher growth quantiles, the impact of debt on firm growth is positive and statistically significant. Our results reconcile the mixed results of the previous studies and have practical implications for financing strategies in emerging markets.
ISSN:2071-1050
2071-1050
DOI:10.3390/su131810457