Debt policy and company value

The influence of debt on the performance and value of the firm remains ambiguous in the financial literature. Is it debt that is the source of the value creation process or is it value that conditions the level of debt? The answer is complex and the direction of causality depends on the existence (or not) of asymmetric information. If we deliberately place ourselves in the situation where debt conditions performance and value, then a second ambiguity arises. Indeed, if debt, or rather its excess, is harmful to the firm, on the other hand it can act as a spur and a means of discipline. The revealing fact of a crisis situation can force managers to take actions that they would have sought to avoid in other circumstances. The influence of debt can only be understood through the specific characteristics of the firm and the environment in which it operates. Indeed, the choice of an optimal debt level will depend on the managers' expectations of the future economic situation.