Firm leverage decisions: Does industry matter?

• We investigate the firm leverage decision of Australian mining and non-mining firms.
• We also test for significant differences in leverage decisions between these firms.
• Mining firms tend to follow pecking order model more closely than non-mining firms.
• Fundamental differences exist between these firms while making leverage decisions.
• Results suggest industry-type does matter for firms making leverage decisions.

We use a standard capital structure mode l to investigate the firm leverage decisions of 1620 companies listed in the Australian Securities Exchange (ASX) across a span of 13 years (2000–2012), dividing the sample into mining and other industries (non-mining). We also test for significant differences in leverage decisions between these two groups by applying a dummy variable approach. Our findings show that fundamental differences exist between mining and non-mining companies when making leverage decisions. We find evidence that mining firms are more sensitive to profitability and asset tangibility where neither profitability nor asset tangibility has significant association for non-mining firms. Overall results suggest that industry-type does matter for firms making leverage decisions.