IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Capital structure: The case of firms issuing debt

Listed author(s):
  • Yushu Zhu
Registered author(s):

    This study reinvestigates the relationship between financial leverage and firm characteristics in a cross-sectional setting and a panel setting. Monte-Carlo simulation-based inference results confirm the finding of Barraclough (2007) that a cross-sectional multiple regression model sharing common divisors suffers from a latent spurious ratio problem. To avoid the spurious ratio problem, variables in changes instead of ratios are adopted in two panel models: a first-differenced fixed-effects panel model and a dynamic Generalized Method of Moments panel model. The two models respectively integrate fixed effects (e.g. the persistence nature of financial leverage) and endogeneity features of financial leverage decisions. Model results suggest past realization of debt explains most of the current debt level after controlling for endogeneity. We find no significant association between debt and firm characteristics.JEL Classification: G32, H20

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Australian School of Business in its journal Australian Journal of Management.

    Volume (Year): 37 (2012)
    Issue (Month): 2 (August)
    Pages: 283-295

    in new window

    Handle: RePEc:sae:ausman:v:37:y:2012:i:2:p:283-295
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:sae:ausman:v:37:y:2012:i:2:p:283-295. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.