Dynamic corporate capital structure behavior: empirical assessment in the light of heterogeneity and non stationarity

Bontempi, Maria Elena ; Bottazzi, Laura ; Golinelli, Roberto (2015) Dynamic corporate capital structure behavior: empirical assessment in the light of heterogeneity and non stationarity. Bologna: Dipartimento di Scienze economiche DSE, p. 53. DOI 10.6092/unibo/amsacta/4157. In: Quaderni - Working Paper DSE (988). ISSN 2282-6483.
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Abstract

Understanding the dynamics of the leverage ratio is at the heart of the empirical research about firms' capital structure, as they can be very different under alternative theoretical models. The pillars of almost all empirical applications are the maintained assumptions of poolability and stationarity, which are motivated by the need of model’s simplicity and treatability, rather than being based on an empirical ground. In this paper we provide robust evidence of non-stationarity for a significantly large share of US firms' debt ratios and of strong heterogeneity in the speeds at which firms adjust towards their targets. These results stimulate new directions of the empirical research on debt ratio dynamics by relying more on the concept of heterogeneous degree of leverage persistence.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bontempi, Maria Elena
Bottazzi, Laura
Golinelli, Roberto
Keywords
Corporate finance, Heterogeneity of agents, Target leverage, Speed of adjustment, Unit roots and cointegration
Subjects
ISSN
2282-6483
DOI
Deposit date
19 Jan 2015 09:51
Last modified
28 Oct 2015 15:35
URI

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