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The Impact of Macroeconomic Uncertainty on Firms' Changes in Financial Leverage

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Author Info
Christopher F. Baum () (Boston College, DIW Berlin)
Atreya Chakraborty () (University of Massachusetts-Boston)
Boyan Liu

Additional information is available for the following registered author(s):

Abstract

We investigate the relationship between a firm's measures of corporate governance, macroeconomic uncertainty and changes in leverage. Recent research highlights the role of governance in financing decisions. Previous research also indicates that macroeconomic uncertainty affects a firm’s ability to borrow. In this paper we investigate how both these channels of influence affects firms' financing decisions. Our findings show that macroeconomic uncertainty has an important role to play, both by itself and in interaction with a measure of corporate governance.

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File URL: http://fmwww.bc.edu/EC-P/WP688.pdf
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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 688.

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Length: 19 pages
Date of creation: 18 Aug 2008
Date of revision:
Publication status: forthcoming, International Journal of Finance & Economics
Handle: RePEc:boc:bocoec:688

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Related research
Keywords: macroeconomic uncertainty; corporate governance; leverage;

Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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