Capital structures of US market firms and its determinants during different macroeconomic states and various leverage levels

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Σαλάτας, Ηλίας

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This thesis investigates multiple factors under the framework of Trade-off theory capital structure theory, initially at a theoretical but mainly at an empirical level under the context of an innovative econometric model. It is an undeniable fact that capital structure is a prerequisite objective for every successful firm and an indication of the effectiveness of administration. This challenge hinders to develop when the economic cycles and financial status are shifting rapidly. In this study, we initially investigate the behavioral variety of firm adjustment speed to targeted debt levels and the capital structure determinants that provide acceleration or brake with special emphasis on different leverage levels and macroeconomic states under the prism of debt maturity distention. Specifically, we examine how these relationships are affected in a span of 44 years, for more than 17.000 United States of America based firms. Moreover, we apply an innovative quantile regression partial adjustment model that enables the investigation of the entire conditional distribution of the response variable. Our findings indicate slow adjustment speed to the desired debt ratio levels and that the lagged debt ratio is the main capital structure determinant regardless the debt maturity distinction (short-debt, long-term debt, total debt). In addition, low leveraged firms tent to adjust faster to targeted debt levels than mid and high leveraged ones not only on normal periods but also over crisis periods although with a slower pace. The investigational approach also reveals that firms are not impacted equally from economic crisis. Finally, is verified that companies exposed to certain factors studied here and with firm characteristics like those of the sample we used in our study, are affected to a different degree depending on the level of leverage and depending on the maturity of the debt. The internal and external corporate factors whose effect is studied over the capital structure are the ratios of long-term, short-term and total debt to capital respectively (long-term debt/total assets, short-debt/total assets, total-debt/total assets), the liquidity to capital (cash/total assets), profitability, size of the business, growth, asset consolidation (tangibility) and external factors such as inflation and the nominal interest rate lending interest.



Capital Structure, Quantile regression partial adjustment model, Leverage, Crisis