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Optimal corporate leverage and speculative cycles: an empirical estimation.

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Title: Optimal corporate leverage and speculative cycles: an empirical estimation.
Authors: Issa, Samar1 (AUTHOR) sissa@saintpeters.edu, Gevorkyan, Aleksandr V.2 (AUTHOR) gevorkya@stjohns.edu
Source: Structural Change & Economic Dynamics. Sep2022, Vol. 62, p478-491. 14p.
Subjects: Counterparty risk, Capital structure, Corporate debt, Global Financial Crisis, 2008-2009
Abstract: This paper develops an empirical model of corporate capital structure, optimal debt, and overleveraging, covering approximately two decades since 2000 across six leading industries: technology, financial, pharmaceutical, auto, airline, and energy. Estimated for each firm (total of 89), the model allows to infer an industry-specific default risk, measuring overleveraging as the difference between actual and optimal debt. The calculated corporate excess debt has largely been moving up, spiking around the global financial crisis and continuing into recovery more recently. The trend is consistent with an increase in the actual debt, with varying average excess debt ratios by sector. These results are informative for more applied ongoing and future outlook studies assessing a range of macroeconomic scenarios. The results also seem to conform to the general Kaleckian–Minskyan analytical framework, suggesting a possibility of endogenously rising speculative borrowing cycles. [ABSTRACT FROM AUTHOR]
Copyright of Structural Change & Economic Dynamics is the property of Elsevier B.V. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Database: Engineering Source
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DbLabel: Engineering Source
An: 158862745
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  Data: Optimal corporate leverage and speculative cycles: an empirical estimation.
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  Data: <searchLink fieldCode="JN" term="%22Structural+Change+%26+Economic+Dynamics%22">Structural Change & Economic Dynamics</searchLink>. Sep2022, Vol. 62, p478-491. 14p.
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  Data: <searchLink fieldCode="DE" term="%22Counterparty+risk%22">Counterparty risk</searchLink><br /><searchLink fieldCode="DE" term="%22Capital+structure%22">Capital structure</searchLink><br /><searchLink fieldCode="DE" term="%22Corporate+debt%22">Corporate debt</searchLink><br /><searchLink fieldCode="DE" term="%22Global+Financial+Crisis%2C+2008-2009%22">Global Financial Crisis, 2008-2009</searchLink>
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  Data: This paper develops an empirical model of corporate capital structure, optimal debt, and overleveraging, covering approximately two decades since 2000 across six leading industries: technology, financial, pharmaceutical, auto, airline, and energy. Estimated for each firm (total of 89), the model allows to infer an industry-specific default risk, measuring overleveraging as the difference between actual and optimal debt. The calculated corporate excess debt has largely been moving up, spiking around the global financial crisis and continuing into recovery more recently. The trend is consistent with an increase in the actual debt, with varying average excess debt ratios by sector. These results are informative for more applied ongoing and future outlook studies assessing a range of macroeconomic scenarios. The results also seem to conform to the general Kaleckian–Minskyan analytical framework, suggesting a possibility of endogenously rising speculative borrowing cycles. [ABSTRACT FROM AUTHOR]
– Name: AbstractSuppliedCopyright
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  Data: <i>Copyright of Structural Change & Economic Dynamics is the property of Elsevier B.V. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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RecordInfo BibRecord:
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      – Type: doi
        Value: 10.1016/j.strueco.2022.06.002
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      – Code: eng
        Text: English
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      Pagination:
        PageCount: 14
        StartPage: 478
    Subjects:
      – SubjectFull: Counterparty risk
        Type: general
      – SubjectFull: Capital structure
        Type: general
      – SubjectFull: Corporate debt
        Type: general
      – SubjectFull: Global Financial Crisis, 2008-2009
        Type: general
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      – TitleFull: Optimal corporate leverage and speculative cycles: an empirical estimation.
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            NameFull: Issa, Samar
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            NameFull: Gevorkyan, Aleksandr V.
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            – D: 01
              M: 09
              Text: Sep2022
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              Y: 2022
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              Value: 62
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            – TitleFull: Structural Change & Economic Dynamics
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