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

Maria Bontempi (), Laura Bottazzi () and Roberto Golinelli ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

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.

JEL-codes: C12 C22 C23 C51 G32 (search for similar items in EconPapers)
Date: 2015-01
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Working Paper: ynamic corporate capital structure behavior:empirical assessment in the light of heterogeneity and non stationarity (2015) Downloads
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