Firms' histories and their capital structures
By: Ayla Kayhan, Sheridan Titman.
Contributors: Titman, Sheridan.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10526; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10526.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Corporations -- Finance.; Capital investments.; Debt.
Description: "This paper examines how cash flows, investment expenditures and stock price histories affect corporate debt ratios.  Consistent with earlier work, we find that these variables have a substantial influence on changes in capital structure.  Specifically, stock price changes and financial deficits (i.e., the amount of external capital raised) have strong influences on capital structure changes, but in contrast to previous conclusions, we find that their effects are subsequently at least partially reversed.  These results indicate that although a firm's history strongly influence their capital structures, that over time, financing choices tend to move firms towards target debt ratios that are consistent with the tradeoff theories of capital structure"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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