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Capital Structure and Speed of Adjustment in U.S. Firms. Α Comparative Study in Microeconomic and Macroeconomic Conditions-A Quantile Regression Approach

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  • Andreas Kaloudis
  • Dimitrios Tsolis

Abstract

The major perspective of this paper is to provide more evidence regarding how “quickly”, in different macroeconomic states, firms adjust their capital structure to their leverage targets. This study extends the empirical research on the topic of capital structure by focusing on a quantile regression model to investigate the behavior of firm-specific and macroeconomic factors across all quantiles of distribution of leverage (book leverage and market leverage). Therefore, depending on a partial adjustment model, we find that the adjustment speed fluctuated in different stages of book versus market leverage. Furthermore, while macroeconomic states change, we detect clear differentiations of the contribution and the effects of the firm-specific and the macroeconomic variables between market leverage and book leverage debt ratios. Consequently, we deduce that across different macroeconomic states the nature and maturity of borrowing influence the persistence and endurance of the relation between determinants and borrowing.

Suggested Citation

  • Andreas Kaloudis & Dimitrios Tsolis, 2019. "Capital Structure and Speed of Adjustment in U.S. Firms. Α Comparative Study in Microeconomic and Macroeconomic Conditions-A Quantile Regression Approach," International Business Research, Canadian Center of Science and Education, vol. 12(10), pages 98-109, October.
    • Handle: RePEc:ibn:ibrjnl:v:12:y:2019:i:10:p:98-109
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    More about this item

    Keywords

    capital structure; quantile regression; macroeconomy; firm characteristics; econometry; total debt; U.S.; panel data; hausman test; fixed effects model; unbalanced sample;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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