The analysis of firms financial decisions still continue to be a relevant issue in the literature because it allows to improve knowledge about firms behaviour, and it has relevant policy effects. In this paper we introduce an econometric model that embodies both trade-off and pecking order theoretical predictions, although the low number of parameters to be estimated. In this way, we can assess the contribution of each of the two theories to explain the effective debt ratio patterns by firm over the 1982-2003 period without assuming companies’ parameter poolability. Results show that the behaviour of Italian enterprises is largely heterogeneous in both the theory driving the historical data and, more relevantly, in the model parameters. For this reason, we further investigate the pure time series outcomes by using both homogeneous and heterogeneous panel unit-root/stationarity tests. Results confirm that heterogeneity may lead to a false rejection of the pecking order theory in panel unit root tests.
The financial behaviour of Italian firms: does poolability matter? An investigation with panel unit root tests
BONTEMPI, Maria Elena;
2005
Abstract
The analysis of firms financial decisions still continue to be a relevant issue in the literature because it allows to improve knowledge about firms behaviour, and it has relevant policy effects. In this paper we introduce an econometric model that embodies both trade-off and pecking order theoretical predictions, although the low number of parameters to be estimated. In this way, we can assess the contribution of each of the two theories to explain the effective debt ratio patterns by firm over the 1982-2003 period without assuming companies’ parameter poolability. Results show that the behaviour of Italian enterprises is largely heterogeneous in both the theory driving the historical data and, more relevantly, in the model parameters. For this reason, we further investigate the pure time series outcomes by using both homogeneous and heterogeneous panel unit-root/stationarity tests. Results confirm that heterogeneity may lead to a false rejection of the pecking order theory in panel unit root tests.I documenti in SFERA sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
