02091cas a2200253 a 4500 AALejournalIMF021426 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513564654 1018-5941 BD-DhAAL BD-DhAAL Cevik, Serhan. Leverage Shocks : Firm-Level Evidence on Debt Overhang and Investment / Serhan Cevik, Fedor Miryugin. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The global economy is in the midst of an unprecedented slump caused by the coronavirus pandemic. This systemic risk like no other at a time of record-breaking debt levels, especially among nonfinancial firms across the world, could exacerbate corporate vulnerabilities, deepen macro-financial instability, and cause long-lasting damage to economic potential. Using data on more than 2.8 million nonfinancial firms from 52 countries during the period 1997-2018, we develop a two-pronged approach to investigate the relationship between corporate leverage and fixed investment spending. The empirical analysis, robust to a battery of sensitivity checks, confirm corporate leverage is highly vulnerable to disruptions in profitability and cash flow at the firm level and economic growth at the aggregate level. These findings imply that corporate debt overhang could become a strenuous burden on nonfinancial firms, especially if the COVID-19 pandemic lingers and global downturn becomes protracted. Mode of access: Internet Miryugin, Fedor. IMF Working Papers; Working Paper ; No. 2020/287 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/287/001.2020.issue-287-en.xml IMF e-Library