Arbeitspapier
Macroeconomic Uncertainty and Firm Leverage
This paper investigates the link between the optimal level of non-financial 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.
- Language
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Englisch
- Bibliographic citation
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Series: DIW Discussion Papers ; No. 443
- Classification
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Wirtschaft
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
- Subject
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leverage
uncertainty
non-financial firms
panel data
- Event
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Geistige Schöpfung
- (who)
-
Baum, Christopher F.
Stephan, Andreas
Talavera, Oleksandr
- Event
-
Veröffentlichung
- (who)
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Deutsches Institut für Wirtschaftsforschung (DIW)
- (where)
-
Berlin
- (when)
-
2004
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Baum, Christopher F.
- Stephan, Andreas
- Talavera, Oleksandr
- Deutsches Institut für Wirtschaftsforschung (DIW)
Time of origin
- 2004
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