The effect of debt on corporate profitability: Evidence from French service sector

Mazen Kebewar and Syed Muhammad Noaman Ahmed Shah

MPRA Paper from University Library of Munich, Germany

Abstract: Current study aims to provide new empirical evidence on the impact of debt on corporate profitability. This impact can be explained by three essential theories: signaling theory, tax theory and the agency cost theory. Using panel data sample of 2240 French non listed companies of service sector during 1999-2006. By utilizing generalized method 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: 2012-12-10
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Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/54875/1/MPRA_paper_54875.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:43304

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