A Study of the Effect of Non-Linearities of the Determinants of Debt on Companies’ Leverage: A Quantile Regression Approach

27 Pages Posted: 21 Dec 2013

See all articles by Javier Sánchez Vidal

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Economics, Accounting and Finance

Date Written: May 1, 2013

Abstract

With a severe debt overhang problem in Spain, either public and private, the analysis of the factors that influence companies’ leverage in this country reveal essential, in particular for the high-indebted firms. This study benefits of the quantile regression approach advantages over the OLS method to analyze the leverage determinants for a large sample of companies for the 2001-2011 period depending on their level of indebtedness. This method reveals that for the highly-leveraged companies many factors are no longer significant and that cash flows variable is crucial if the companies would like to decrease their debt levels.

Keywords: Quantile Regressions, Capital Structure, High-debt companies

JEL Classification: G32, C13

Suggested Citation

Sánchez Vidal, Javier, A Study of the Effect of Non-Linearities of the Determinants of Debt on Companies’ Leverage: A Quantile Regression Approach (May 1, 2013). Available at SSRN: https://ssrn.com/abstract=2370300 or http://dx.doi.org/10.2139/ssrn.2370300

Javier Sánchez Vidal (Contact Author)

Universidad Politecnica de Cartagena - Department of Economics, Accounting and Finance ( email )

Calle Real, 3
Cartagena, 30201
Spain

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