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|c 5.00 USD
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|z 9781589064126
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|a 1018-5941
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|a BD-DhAAL
|c BD-DhAAL
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|a Haque, Sharjil.
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|a The COVID-19 Impact on Corporate Leverage and Financial Fragility /
|c Sharjil Haque, Richard Varghese.
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|a Washington, D.C. :
|b International Monetary Fund,
|c 2021.
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|a 1 online resource (51 pages)
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|a IMF Working Papers
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|a <strong>Off-Campus Access:</strong> No User ID or Password Required
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|a <strong>On-Campus Access:</strong> No User ID or Password Required
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|a Electronic access restricted to authorized BRAC University faculty, staff and students
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|a We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
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|a Mode of access: Internet
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|a Capital and Ownership Structure
|2 imf
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|a Corporate Finance and Governance
|2 imf
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| 650 |
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|a Financial Economics
|2 imf
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|a Financial Risk and Risk Management
|2 imf
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|a Financing Policy
|2 imf
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|a General Financial Markets
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|a Varghese, Richard.
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|a IMF Working Papers; Working Paper ;
|v No. 2021/265
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| 856 |
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|z Full text available on IMF
|u http://elibrary.imf.org/view/journals/001/2021/265/001.2021.issue-265-en.xml
|z IMF e-Library
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