Empirical Economics

, Volume 34, Issue 3, pp 417–438

Non-linearity in the determinants of capital structure: evidence from UK firms

  • Bassam Fattouh
  • Laurence Harris
  • Pasquale Scaramozzino
Original Paper

DOI: 10.1007/s00181-007-0128-3

Cite this article as:
Fattouh, B., Harris, L. & Scaramozzino, P. Empirical Economics (2008) 34: 417. doi:10.1007/s00181-007-0128-3

Abstract

We demonstrate that, by exploiting more fully the distribution of leverage, conditional quantile regression methods yield new insights into the choice of leverage ratio. For UK listed companies we find that not only is the estimated effect of the explanatory variables different at different quantiles of the distribution, but also that the effect of a variable changes sign between low leveraged and high leveraged firms.

Keywords

Capital structureQuantile regression methodUK

JEL Classification

G32C29

Copyright information

© Springer Verlag 2007

Authors and Affiliations

  • Bassam Fattouh
    • 1
  • Laurence Harris
    • 1
  • Pasquale Scaramozzino
    • 1
    • 2
  1. 1.Department for Financial and Management Studies, SOASUniversity of LondonLondonUK
  2. 2.Department of EconomicsUniversita’ di Roma Tor VergataRomeItaly