Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159826
Authors: 
Bontempi, Maria Elena
Bottazzi, Laura
Golinelli, Roberto
Year of Publication: 
2015
Series/Report no.: 
Quaderni - Working Paper DSE 988
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: 
G32
C12
C22
C23
C51
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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