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
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: Suggested Citation