Skip to main content

Asymmetries in the Firm's use of debt to changing market values

Ferris, Stephen P., Hanousek, Jan, Shamshur, Anastasiya, Tresl, Jiri (2018) Asymmetries in the Firm's use of debt to changing market values. Journal of Corporate Finance, 48 . pp. 542-555. ISSN 0929-1199. (doi:10.1016/j.jcorpfin.2017.12.006) (KAR id:78278)

PDF Author's Accepted Manuscript
Language: English
Download (989kB) Preview
[thumbnail of 3a. Asymmetries JCorpFin_2017_Ferris_etal.pdf]
This file may not be suitable for users of assistive technology.
Request an accessible format
Official URL:


Using a sample of U.S. firms over the period, 1984 to 2013, this study examines the relation between market and book leverage ratios. Unlike Welch (2004) who contends that changes in market leverage do not induce adjustments in book leverage, we find an asymmetric effect. That is, firms adjust their book leverage only when the changes in market leverage are due to increases in equity values. No adjustment is observed when firm equity values decrease. Our results are consistent with Myers (1977) and Barclay et al. (2006) who argue that optimal debt levels decrease with corporate growth opportunities. © 2017 The Authors

Item Type: Article
DOI/Identification number: 10.1016/j.jcorpfin.2017.12.006
Uncontrolled keywords: Market leverage; Book leverage; Capital structure; Adjustment speed; cequfin
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Depositing User: Anastasiya Shamshur
Date Deposited: 08 Nov 2019 15:01 UTC
Last Modified: 07 Oct 2021 13:35 UTC
Resource URI: (The current URI for this page, for reference purposes)
Shamshur, Anastasiya:
  • Depositors only (login required):


Downloads per month over past year