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Capital structure volatility in Europe

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  • Campbell, Gareth
  • Rogers, Meeghan

Abstract

Contrary to the predictions of the trade-off theory, we find that many companies in Europe had substantial variation in their capital structures between 2006 and 2016. We show that this pattern occurred across countries. Companies with the most volatile debt ratios tended to be smaller, and were less profitable. Their high debt volatility was partly due to high volatility in operating and investing activities, and partly due to a reduced propensity to let cash balances and equity payouts absorb the fluctuations.

Suggested Citation

  • Campbell, Gareth & Rogers, Meeghan, 2018. "Capital structure volatility in Europe," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 128-139.
    • Handle: RePEc:eee:finana:v:55:y:2018:i:c:p:128-139
    DOI: 10.1016/j.irfa.2017.11.008
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    5. Adhikari, Sudip & Khanal, Aditya R., 2020. "Does higher business risk influence financial risk and induce savings among small agricultural operations? Findings from Tennessee," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304509, Agricultural and Applied Economics Association.
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    7. Lydie Myriam Marcelle Amelot & Subadar Agathee Ushad & Mattew Lamport, 2018. "Capital Structure and Political Risk in an Emerging Market: Evidence from Companies Listed on the Stock Exchange of Mauritius," Business and Economic Research, Macrothink Institute, vol. 8(3), pages 104-117, September.

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