Capital structure: the case of firms issuing debt

Zhu, Yushu (2012) Capital structure: the case of firms issuing debt. Australian Journal of Management, 37 2: 283-295. doi:10.1177/0312896211429159


Author Zhu, Yushu
Title Capital structure: the case of firms issuing debt
Journal name Australian Journal of Management   Check publisher's open access policy
ISSN 0312-8962
1327-2020
Publication date 2012-08
Sub-type Article (original research)
DOI 10.1177/0312896211429159
Volume 37
Issue 2
Start page 283
End page 295
Total pages 13
Place of publication London, United Kingdom
Publisher Sage Publications
Collection year 2013
Language eng
Abstract 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.
Keyword Capital structure
Endogeneity
Panel model
Spurious ratio
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Erratum doi: http://dx.doi.org/10.1177/0312896212463296

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2013 Collection
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 9 times in Thomson Reuters Web of Science Article | Citations
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Created: Wed, 07 Nov 2012, 13:34:14 EST by Karen Morgan on behalf of UQ Business School