DOI: 10.5176/2251-1997_AF26
Authors: Khurram Khan and Muhammad Rafiq
Abstract:
The study explores the relationship between capital structure and inflation, and tries to answer the question: Do firms prefer debt as a capital structure under inflationary economic conditions? A sample of fifty three non-financial firms extended over a period of ten years was analyzed using time series analysis and WLS panel regression. The time series analysis suggests a positive relationship between leverage and inflation; whereas WLS panel regression suggests a negative relationship between the two variables. However, both the results are statistically insignificant. A conclusive relationship between leverage and inflation could not be established.
Keywords: Capital Structure, Leverage, Inflation:
Updating...