earticle

영어

In this study, we explore a condition where corporate debt can be strategically used in the stock market by governing its interpretations from investors. To disentangle the performance implications of corporate debt, we pay attention to the signaling aspect of debt financing. Acknowledging that investors can interpret the value of a firm with the level of debt, we postulate that debt can convey differentiated signals (i.e. driver vs. distress). In addition, we argue that the bifurcated role of debt can be moderated by marketing activities, which can affect the stakeholders’ interpretations. This idea is empirically examined in a population of SMEs (Small- and Medium-sized Enterprises). Using COMPUSTAT database of 2,174 U.S. public firms ranging from 1982 to 2010, we find resource-independent debt (called idiosyncratic debt) has bifurcated impacts on Buy-and-Hold Abnormal Returns (BHARs) and the marketing moderation of such relationship is also bifurcated.