The effect of Debt on Corporate Profitability:Evidence from French Service Sector

Mazen Kebewar

Brussels Economic Review, 2013, vol. 56, issue 1, 43-59

Abstract: ABSTRACT:Current study aims to provide new and first empirical evidence on the impact of debt oncorporate profitability of French service sector. This impact can be explained by three essentialtheories: signaling theory, tax theory and the agency cost theory. Using panel data sample of2240 French non listed companies of service sector during 1999-2006. By utilizing generalizedmethod of moments (GMM) econometric technique on three measures of profitability ratio(PROF1, PROF2 and ROA), we show that debt ratio has no effect on corporate profitability,regardless of the size of company (VSEs, SMEs or LEs).

Keywords: Debt; GMM; Panel data; Profitability (search for similar items in EconPapers)
JEL-codes: C33 G32 L25 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The effect of debt on corporate profitability: Evidence from French service sector (2014)
Working Paper: The effect of debt on corporate profitability: Evidence from French service sector (2012)
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