TY  - JOUR
AU  - Lang,Larry
AU  - Ofek,Eli
AU  - Stulz,Rene M.
TI  - Leverage, Investment, and Firm Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5165
PY  - 1995
Y2  - July 1995
UR  - http://www.nber.org/papers/w5165
L1  - http://www.nber.org/papers/w5165.pdf
N1  - Author contact info:
Eli Ofek
Stern School of Business
New York University
44 West 4th Street, Suite 9-190
New York, NY 10012
Tel: 212/998-0356
Fax: 212/995-4233
E-Mail: eofek@stern.nyu.edu

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
M2  - featured in NBER digest on 1996-01-01
AB  - We show that there is a negative relation between leverage and future growth at the firm level and, for diversified firms, at the segment level.  Further, this negative relation between leverage and growth holds for firms with low Tobin's q, but not for high-q firms or firms in high-q industries.  Therefore, leverage does not reduce growth for firms known to have good investment opportunities, but is negatively related to growth for firms whose growth opportunities are either not recognized by the capital markets or are not sufficiently valuable to overcome the effects of their debt overhang.
ER  -