Debt Management By Banks and Expansion of the Specific Investments: The French Experience

Abstract

The paper analyze the impact of banks on the adoption of specific investment in French non-financial companies through board representation and ownership stakes. The theoretical principles suggest that the banks refuse the financing of this type of investment. Therefore, the level of banking debth as anegative effect on the specific investment. Our hypotheses suggest that this effect changes according to the contribution of bankers in the corporate governance system. The results obtained by a set of w1i-varied parametric and non-parametric averages' comparison tests along with multi-varied analyses (logistics) carried out on a sample including 176 French listed firms over a six-year -period (1998-2003) show a change in the behaviour of banks following a real implication in the corporate governance system. Moreover this behaviour depends on the technological degree that characterizes the activity of the firms.