PU_Lev_Adjustments_SSRN.pdf (977.36 kB)
Global leverage adjustments, uncertainty, and country institutional strength
journal contribution
posted on 2023-06-10, 02:41 authored by Gonal ColakGonal Colak, Ali Gungoraydinoglu, Özde ÖztekinUsing a broad range of uncertainty measures, we show that uncertainty dramatically slows down firms’ adjustments toward their optimal capital structure. At the upper bound, the estimated speed of leverage adjustments almost halves when uncertainty is high. High quality institutions (common law legal origin, more disclosure to congress and/or to the public, and higher public sector ethics) and presidential political systems offset some of the adverse effects of uncertainty on leverage adjustments. The financial crisis has altered the relationships among uncertainty, adjustment speeds, and a country's institutions; more so for countries with weak institutions and parliamentary systems.
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Publication status
- Published
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- Accepted version
Journal
Journal of Financial IntermediationISSN
1042-9573Publisher
ElsevierExternal DOI
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35Page range
41-56Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2022-02-22First Open Access (FOA) Date
2022-02-22First Compliant Deposit (FCD) Date
2022-02-21Usage metrics
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