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Asymmetries in the firm's use of debt to changing market values
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SYSNO ASEP 0490260 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Asymmetries in the firm's use of debt to changing market values Author(s) Ferris, S. P. (US)
Hanousek, Jan (NHU-C) RID
Shamshur, A. (BY)
Trešl, J. (CZ)Source Title Journal of Corporate Finance. - : Elsevier - ISSN 0929-1199
Roč. 48, February (2018), s. 542-555Number of pages 14 s. Language eng - English Country NL - Netherlands Keywords market leverage ; book leverage ; capital structure Subject RIV AH - Economics OECD category Finance R&D Projects GA15-15927S GA ČR - Czech Science Foundation (CSF) Institutional support NHU-C - Progres-Q24 UT WOS 000424721900028 EID SCOPUS 85038879353 DOI 10.1016/j.jcorpfin.2017.12.006 Annotation Using a sample of U.S. firms over the period, 1984 to 2013, this study examines the relation between market and book leverage ratios. Unlike Welch (2004) who contends that changes in market leverage do not induce adjustments in book leverage, we find an asymmetric effect. That is, firms adjust their book leverage only when the changes in market leverage are due to increases in equity values. No adjustment is observed when firm equity values decrease. Our results are consistent with Myers (1977) and Barclay et al. (2006) who argue that optimal debt levels decrease with corporate growth opportunities. Workplace Economics Institute - CERGE Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2019
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