Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5062588 | Economics Letters | 2007 | 7 Pages |
Abstract
The leverage ratio of an average firm reverts to mean mechanically regardless of whether target leverage exists. This cautions against studies that use the ability of the leverage ratio (or deviation from target leverage) to predict future leverage changes to draw inference on capital structure theories.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Long Chen, Xinlei Zhao,