Firms' Histories and Their Capital Structures

Ayla Kayhan () and Sheridan Titman

No 10526, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how cash flows, investment expenditures and stock price histories affect corporate debt ratios. Consistent with earlier work, we find that these variables have a substantial influence on changes in capital structure. Specifically, stock price changes and financial deficits (i.e., the amount of external capital raised) have strong influences on capital structure changes, but in contrast to previous conclusions, we find that their effects are subsequently at least partially reversed. These results indicate that although a firm's history strongly influence their capital structures, that over time, financing choices tend to move firms towards target debt ratios that are consistent with the tradeoff theories of capital structure.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2004-05
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-his
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published as Kayhan, Ayla & Titman, Sheridan, 2007. "Firms' histories and their capital structures," Journal of Financial Economics, Elsevier, vol. 83(1), pages 1-32, January.

Downloads: (external link)
http://www.nber.org/papers/w10526.pdf (application/pdf)

Related works:
Journal Article: Firms' histories and their capital structures (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10526

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10526

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().