Effects of a Long-Term Debt on a Firm's Performance

4099 Words16 Pages
Long-term debt and firm's performance Introduction As a result of the imperfections that exist in the capital market, policy makers involved in economics have in the past held the view that there is a shortage in the availability of long term finance to organizations and this has acted as a huge barrier to the growth and performance of various organizations. This belief has led to special institutions of lending being established and supported by the governments as well as other developmental agencies especially in developing countries. Long term debt is thought to give organizations the allowance to invest in other forms of technology that are more productive even though they do not provide any immediate returns and without the fear of the company facing premature liquidation ADDIN EN.CITE Bharadwaj2000954(Bharadwaj, 2000)95495417Bharadwaj, Anandhi S.A Resource-Based Perspective on Information Technology Capability and Firm Performance: An Empirical InvestigationMIS QuarterlyMIS Quarterly169-1962412000Management Information Systems Research Center, University of Minnesota02767783http://www.jstor.org/stable/3250983( HYPERLINK l "_ENREF_1" o "Bharadwaj, 2000 #954" Bharadwaj, 2000). Short term finance has over the years been the better option for many organizations as well as for lenders. This is because short term finance has always allowed the suppliers of the finance to monitor and control the organizations with more effectiveness and with favorable effects on the
Open Document