Investment and Debt ratio of ICT firms

ICT 기업의 부채수준이 투자활동에 미치는 영향

  • Chon, Mi-Lim (Department of Accounting, Cheongju University)
  • Received : 2014.12.03
  • Accepted : 2015.02.20
  • Published : 2015.02.28


This paper investigate the determinants of investment for a cross-section of firms in emerging market. I examine three factors expected to affect investment: debt ratio, growth rate, and industry. I find that debt ratio and ICT firms are positively associated with investment in emerging market. I also find that ICT firms with high debt ratio have higher net capital expenditures. While the growth rate is unrelated to net capital expenditures. Unlike the evidence from the developed markets, debt ratio has significant and positive impact on investment (net capital expenditures) in the emerging market.


Supported by : 청주대학교 경영경제연구소


  1. Modigliani, F., Miller, M.H., "The cost of capital, corporation finance, and the theory of investment", American Economic Review, Vol. 53, pp. 433-443, 1958.
  2. Myers, S., "The determinants of corporate borrowing.", Journal of Financial Economics, Vol. 5, pp. 147-175, 1977.
  3. Jensen, M.C., "Agency costs of free cash flow, corporate finance, and takeovers", American Economic Review, Vol. 2, pp. 76, 323-329, 1986.
  4. Ahn, S, D.J. Danis, D.K. Danis, "Leverage and investment in diversified firms", Journal of Financial Economics, Vol. 79, pp. 317-337, 2006.
  5. Lang, L.,E. Ofek, and Stulz R. M., "Leverage, investment, and firm growth", Journal of Financial Economics, Vol. 40, pp. 3-29, 1996.
  6. Mao, C.X., "Interaction of the Debt Agency Problems and Optimal Capital Structure: Theory and Evidence", Working paper, 2002.
  7. Gavish, B., and A. Kalay, "On the Asset Substitution Problem", Journal of Financial and Quantitative Analysis, Vol. 26, pp. 21-30, 1983.
  8. Green, R., and E. Talmor, "Asset Substitution and the Agency Costs of Debt Financing", Journal of Banking and Finance, Vol. 10, pp. 391-399, 1986.
  9. Johnson, S.A., "An empirical analysis of the determinants of corporate debt ownership structure", Journal of Financial and Quantitative Analysis, Vol. 32, No.1, pp. 47-69, 2003.
  10. Aivazian, V.A., Callen, J.L., "Corporate leverage and growth: the game-theoretic issues", Journal of Financial Economics, Vol. 8, pp. 379-399, 1980.
  11. Aviazian, V.A., Y. Ge, and J. Qiu, "The impact of leverage on firm investment: Canadian evidence", Journal of Coporate Finance, Vol. 11, pp. 277-299, 2005.
  12. Ritter, J., "The Long-Run Performance of Initial Public Offerings", Journal of Finance, Vol. 46, pp. 3-27, 1991.
  13. Lev, B., "On the Association between Operating Leverage and Risk", Journal of Financial and Quantitative Analysis, Vol. 9, pp. 627-641, 1974.
  14. Martikaine, M., "Accounting Losses and Earnings Response Coefficients: The Impact of Leverage and Growth Opportunities", Journal of Business Finance & Accounting, Vol. 24 pp. 277-292, 1997.
  15. Claire E. Crutchley and Robert S. H., "A Test of the Agency Theory of Managerial Ownership, Corporate Leverage, and Corporate Dividends", Financial Management, Vol. 18, No. 4, pp. 36-46, 1989.