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Financial pressure and balance sheet adjustment by UK firms

  • Andrew Benito
  • Garry Young

In this paper the financial policies and balance sheet adjustment of companies are examined. Using a large panel of quoted UK firms, models for dividends, new equity issuance and investment are estimated, relating them to debt adjustment. The results suggest that while dividends are sticky in the short run, they are an important means of balance sheet adjustment in the long run. Other evidence supports the idea that companies actively target their balance sheet by variation in dividends, new equity issues and investment.

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File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2002/wp168.pdf
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Paper provided by Bank of England in its series Bank of England working papers with number 168.

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Date of creation: Oct 2002
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Handle: RePEc:boe:boeewp:168
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