Economic Uncertainty, Capital Structure, and Firm Investment

DOI

10.2991/aebmr.k.201211.075How to use a DOI?

Keywords

Economic uncertainty, capital structure, investment

Abstract

Our main goal in this article is to find out in the period of great economic uncertainty, will the impact of capital structure on investment be reduced(Ivashina and Scharfstein, 2010). We want to ask how will economic uncertainty affect this positive relationship between capital structure and investment. We use five indicators to reflect the capital structure of enterprises and one indicator of economic uncertainty. Capital structure indicators include long term net asset liability ratio, short term net asset liability ratio, long term asset liability ratio, short term asset liability ratio and asset liability ratio. The economic uncertainty measure we use here is the conditional variance based on graph (1,1) model estimated using quarterly adjusted GDP growth rate. (Hadlock and Pierce, 2010) point out that it is difficult to identify the impact of capital structure on corporate behavior. Therefore, we follow (Wintoki, et al. 2012) using Bartik tool variables to conduct panel two-stage least squares method in the industry. What is more, we use the propensity matching score method (Tian, 2014) to exclude the potential impact of enterprise characteristics. In addition (Heckman, 1979), we also use the Heckman style two-stage least square method to control the potential deviation caused by the listed companies are usually high capital structure companies. From the past article, we can find that the amount of investment will be affected by many factors. Like the development potential of the industry and also the state of the economy affects investment.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Xinyi Yang
PY  - 2020
DA  - 2020/12/14
TI  - Economic Uncertainty, Capital Structure, and Firm Investment
BT  - Proceedings of the Fifth International Conference on Economic and Business Management (FEBM 2020)
PB  - Atlantis Press
SP  - 434
EP  - 446
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201211.075
DO  - 10.2991/aebmr.k.201211.075
ID  - Yang2020
ER  -