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The impact of macroeconomic uncertainty on firms' changes in financial leverage

  • Christopher F. Baum

    (Boston College
    DIW Berlin)

  • Atreya Chakraborty

    (University of Massachusetts, Boston, USA)

  • Boyan Liu

    (Beihang University, Beijing, China)

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. Copyright © 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/ijfe.406
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Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.

Volume (Year): 15 (2010)
Issue (Month): 1 ()
Pages: 22-30

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Handle: RePEc:ijf:ijfiec:v:15:y:2010:i:1:p:22-30
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