Capital structure and regulation in U.S. local telephony an exploratory econometric study
The paper aims at empirically investigating the relationship between regulation and the capital structure of the regulated firm, A key aspect of the referred relationship pertains a leverage effect according to which debt could be increased as a response to previous physical capital investment with...
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| Format: | UnknownFormat |
| Sprache: | eng |
| Veröffentlicht: |
Munich
Univ., Center for Economic Studies
2009
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| Schriftenreihe: | CESifo working paper series Industrial organisation
2681 |
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Tag hinzufügen | Zusammenfassung: | The paper aims at empirically investigating the relationship between regulation and the capital structure of the regulated firm, A key aspect of the referred relationship pertains a leverage effect according to which debt could be increased as a response to previous physical capital investment with an ultimate goal of inducing higher rates. Theoretical models like Spiegel and Spulber [1997, RAND Journal of Economics] highlight that effect. The present paper considers a panel data set of local exchange carriers-LECs in the U.S. and investigate Granger causality between changes in long-term debt (NDEBT) and gross investment (INV) in physical capital. The evidence accruing from a dynamic panel data estimation indicates an uni-directional causality from INV to NDEBT and therefore is, to a large extent, consistent with a leverage effect and with the notion that the size of the firmś investment project can impose a restriction on the amount of new debt. The result prevails independent of a control variable that indicates the regulatory regime. |
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| Beschreibung: | Literaturverz. S.[15-17] |
| Beschreibung: | [18 S.] Tab. |