2002, Capital structure choice: Macroeconomic conditions and financial constraints
| Venue: | Journal of Financial Economics |
| Citations: | 27 - 3 self |
BibTeX
@ARTICLE{Korajczyk_2002,capital,
author = {Robert A. Korajczyk and Amnon Levy and We Thank Susan Chaplinsky and Matthew Clayton and Kent Daniel and Chris Hennessy and Laurie Hodrick and Jagannathan Deborah Lucas Mitchell Petersen},
title = {2002, Capital structure choice: Macroeconomic conditions and financial constraints},
journal = {Journal of Financial Economics},
year = {},
pages = {75--109}
}
Years of Citing Articles
Bookmark
 |
 |
 |
 |
 |
 |
OpenURL
Abstract
This paper provides new evidence of how macroeconomic conditions affect capital structure choice. We model firms ’ target capital structures as a function of macroeconomic conditions and firm-specific variables. We split our sample based on a measure of financial constraints. We find that target leverage is counter-cyclical for the relativelyunconstrained sample, but pro-cyclical for the relativelyconstrained sample. The choice of what type of security to issue/repurchase is significantly related to deviations from the target capital structure, particularly for the constrained sample. Macroeconomic conditions are significant for issue choice for unconstrained firms but less so for constrained firms. Our results support the hypothesis that unconstrained firms are able to time their issue choice to periods when macroeconomic conditions are favorable, while constrained firms take what they can get.
