Validating the Trade-off Hypothesis Between Operating and Financail Leverages : A Japan Empirical Study
| Autor: | Fong, Lin-Fong, 方凌峰 |
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| Rok vydání: | 1997 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 85 Is the trade-off between a firm''s operating and financial leveragesalways holding true? While it sounds logical from the financial theories andintuition points of view, empirical results are not unanimously supportive. Thepaper attempts to validating under what contingencies the trade-off hypothesiswill hold true using Japanese data. The two contingencies,a firm''s growth andrisk levels,are empirically explored in the research. Empirical results usingJapanese data have confirmed hypothesized contingencies. First, the level offirm''s sales growth rate does affects its trade-off behavior. The higher a firm''s sales growth rate tend to lead to, the lower level of trade-off. Second,how one measures a company''s risk will affect whether the trade-off relation-ship exists. By using the variation of the net income growth rates as the proxyto a firm''s risk, we find that the higher a firm''s risk level, the higher degree of trade-off relationship. In addtion, the industry category per se seems not a useful contingent variable to differentiate the trade-off relation-ship. Finally, considering sales growth rate and other contingent variablessuch as profitability and company size simultaneously, we have obtained mixedresults. The higher the profitability or the larger the company size lead toweaken the hypothesized trade-off relationship. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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