On the Determinants of Firm Leverage: Evidence from a Structural Estimation
Menichini, Amilcar A.
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I provide further evidence on the determinants of corporate capital structure by estimating a dynamic trade-off model of the firm that includes investment, leverage, and payout decisions. The structural model generates a leverage ratio that oscillates around a long-run, time-invariant level and consistently reproduces the convergence and stability of leverage reported by Lemmon, Roberts, and Zender (2008). The dynamic model sheds light on the role played by the primitive characteristics of the firm (e.g., production technology) to explain the cross-sectional variation in capital structure. I use Efficient Method of Moments (EMM) to recover the structural parameters.
The article of record as published may be found at http://dx.doi.org/10.2139/ssrn.1669014
RightsThis publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
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Menichini, Amilcar A. (Monterey, California: Naval Postgraduate School., 2012-01-27);I provide further evidence on the determinants of corporate capital structure by estimating a dynamic trade-o¤ model of the rm that includes investment, leverage, and payout de- cisions. The structural model generates ...
Menichini, Amilcar (Emerald Group Publishing Limited, 2018-02-15);Purpose – The purpose of this paper is to investigate the phenomena of convergence and stability of leverage reported by Lemmon et al. (2008). Design/methodology/approach – A dynamic trade-off model of the firm was ...
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