Lun, 11/04/2022 - 13:00 / 14:00
403, Viale Romania
Speaker: Michela Altieri , Luiss
with Söhnke Bartram and René Stulz
Using a sample of more than 160,000 firm-year observations from 2006 to 2017 across 50 countries, we investigate the importance of a firm’s country for its leverage and the composition of its debt.
With financial globalization, we expect a firm’s characteristics, including its industry, to be more informative about its debt financing policies than its country. We find that this is the case for leverage, but not for the composition of debt.
We use boosted regression trees to assess the importance of firm and country characteristics in explaining a firm’s leverage and composition of debt. This approach allows us to assess the influence of a large number of features allowing for nonlinearities and interactions.
We find that culture variables and legal system are the most influential feature in explaining the fraction of debt made up by loans. In contrast, they have trivial influence on leverage. The overall evidence suggests that leverage and debt composition decisions are separate decisions.