Our news journalists obtained a quote from the research, "We further find that strong creditor protection lowers long-term debt issuance, the extent to which investments are financed with long-term debt, and target leverage ratios. Finally, we find that firm and country characteristics influence the link between creditor protection and long-term leverage."
According to the news editors, the research concluded: "Our results support the demand-side view that strong creditor protection discourages firms from making long-term cash flow commitments to service debt because managers and shareholders avoid the risk of losing control in the case of financial distress."
For more information on this research see: Creditor rights and capital structure: Evidence from international data.
The news correspondents report that additional information may be obtained from S.S. Cho, Sungkyunkwan UniversitySKKU Business Sch,
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