English, Article, Journal or magazine article edition: The Effects of Uncertainty on the Leverage of Non-Financial Firms Christopher F. Baum; Andreas Stephan; Oleksandr Talavera

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Bookmark: http://trove.nla.gov.au/version/73578
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The Effects of Uncertainty on the Leverage of Non-Financial Firms
Author
  • Christopher F. Baum
  • Andreas Stephan
  • Oleksandr Talavera
Physical Description
  • preprint
Notes
  • This paper investigates the link between the optimal level of nonfinancial firms' leverage and macroeconomic uncertainty. We develop a structural model of a firm's value maximization problem that predicts that as macroeconomic uncertainty increases the firm will decrease its optimal level of borrowing. We test this proposition using a panel of non-financial US firms drawn from the COMPUSTAT quarterly database covering the period 1991-2001. The estimates confirm that as macroeconomic uncertainty increases, firms decrease their levels of leverage. Furthermore, we demonstrate that our results are robust with respect to the inclusion of the index of leading indicators.
  • leverage, uncertainty, non--financial firms, panel data
  • RePEc:boc:bocoec:602
Language
  • English
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