Non-linearity in the determinants of capital structure: evidence from UK firms
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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.
KeywordsCapital structure Quantile regression method UK
JEL ClassificationG32 C29
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