Are Highly Leveraged Firms More Sensitive to an Economic Downturn?
(2003) In European Journal of Finance 9(3). p.219-241- Abstract
- The paper tests the hypothesis that highly leveraged firms lose market shares to their less leveraged rivals in an industry downturn. Both parametric and semiparametric regression methods are applied to analyse the relationships between firm performance and leverage. It is found that the highly leveraged firms in distressed industries face relatively lower sales growth and stock returns but are still able to retain a relatively higher growth in profitability. The findings may suggest that the decline in sales of the highly leveraged firms might be a result of managers' preferences to decrease the activity of product lines with low profitability.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/1387210
- author
- Asgharian, Hossein LU
- organization
- publishing date
- 2003
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- semiparametric regression, robust regression, nonlinear model, firm performance, financial distress
- in
- European Journal of Finance
- volume
- 9
- issue
- 3
- pages
- 219 - 241
- publisher
- Taylor & Francis
- external identifiers
-
- scopus:0344629433
- ISSN
- 1466-4364
- DOI
- 10.1080/13518470210132381
- language
- English
- LU publication?
- yes
- id
- e91cbe81-d499-430f-9d3a-1b47d889ff2d (old id 1387210)
- date added to LUP
- 2016-04-01 12:04:36
- date last changed
- 2022-03-28 19:56:12
@article{e91cbe81-d499-430f-9d3a-1b47d889ff2d, abstract = {{The paper tests the hypothesis that highly leveraged firms lose market shares to their less leveraged rivals in an industry downturn. Both parametric and semiparametric regression methods are applied to analyse the relationships between firm performance and leverage. It is found that the highly leveraged firms in distressed industries face relatively lower sales growth and stock returns but are still able to retain a relatively higher growth in profitability. The findings may suggest that the decline in sales of the highly leveraged firms might be a result of managers' preferences to decrease the activity of product lines with low profitability.}}, author = {{Asgharian, Hossein}}, issn = {{1466-4364}}, keywords = {{semiparametric regression; robust regression; nonlinear model; firm performance; financial distress}}, language = {{eng}}, number = {{3}}, pages = {{219--241}}, publisher = {{Taylor & Francis}}, series = {{European Journal of Finance}}, title = {{Are Highly Leveraged Firms More Sensitive to an Economic Downturn?}}, url = {{http://dx.doi.org/10.1080/13518470210132381}}, doi = {{10.1080/13518470210132381}}, volume = {{9}}, year = {{2003}}, }