Leverage negatively impacts firm investment decisions, regardless of growth opportunities.
The study looked at how borrowing money affects a company's decision to invest in projects. They studied Dutch companies, separating them into high and low growth categories. By analyzing the data, they found that companies tend to invest less when they have more debt, regardless of their growth potential. This suggests that companies may be cautious about taking on too much debt, as it can impact their ability to invest in new opportunities.