IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v46y2014i33p4104-4115.html
   My bibliography  Save this article

Involuntary corporate finance: the dominance of history in decisions

Author

Listed:
  • Les Coleman

Abstract

Lagged values of corporate finance decisions are known to be economically important, but most analyses ignore them. This article examines the influence on five key financial decisions of previous decisions using a data set that includes industry census data. It finds that lagged values explain between 25% and 36% of decisions on leverage, payout and investment, which gives them strong predictive ability. In regression of these decisions on firm and industry traits, omission of lagged values leads to a change of around one-third in parameter estimates, and so significantly overstates their impact. The influence of lagged values persists, and for most decisions is significant for several years. Given the stickiness in financial decisions, there are potentially significant analytical problems from ignoring their lagged values.

Suggested Citation

  • Les Coleman, 2014. "Involuntary corporate finance: the dominance of history in decisions," Applied Economics, Taylor & Francis Journals, vol. 46(33), pages 4104-4115, November.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:33:p:4104-4115
    DOI: 10.1080/00036846.2014.952889
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2014.952889
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2014.952889?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Les Coleman, 2023. "Explaining mutual fund behavior through the structure‐conduct‐performance lens," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2874-2884, July.
    2. Philippe Adair & Mohamed Adaskou, 2017. "The capital structure of French SMEs and impact of the financial crisis: A dynamic panel data analysis (2002-2010)," Working Papers hal-01667313, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:46:y:2014:i:33:p:4104-4115. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.