 The joint effects of economic policy uncertainty and firm characteristics on capital structure: Evidence from US firmsXiao-Ming Li and Mei Qiu Journal of International Money and Finance, 2021, vol. 110, issue C Abstract: This study explores empirically how economic policy uncertainty (EPU) and firm characteristics jointly affect the capital structure decisions of US firms. Using the most comprehensive measure of EPU available, we conceive a research framework by allowing EPU to interact with firm characteristics in dynamic panel regression models, and control for general economic uncertainties and financial crises. Our results reveal that EPU and firm characteristics are jointly important in shaping companies’ debt-financing decisions. The marginal effects of a firm’s characteristics on debt ratios are not constant but change with EPU even in their signs. The marginal effect of EPU on debt ratios is not uniform in the cross-section due to firms having different characteristics and can be positive for some firms while negative for others. However, on average, a rise in EPU would cause economically significant declines in the debt ratios of firms. Keywords: Economic policy uncertainty; Firm characteristics; Capital structure; US firms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:110:y:2021:i:c:s0261560620302357 DOI: 10.1016/j.jimonfin.2020.102279 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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