Citation
Chow, Yee Peng and Muhammad, Junaina and Amin Noordin, Bany Ariffin and Cheng, Fan Fah
(2017)
Risks and financing decisions: dynamic panel data evidence from the Philippines.
In: 3rd International Conference on Advanced Research in Business and Social Sciences 2017 (ICARBSS 2017), 29-30 Mar. 2017, Aseania Resort & Spa Langkawi, Malaysia. (pp. 405-411).
Abstract
Using a sample of listed non-financial Philippine firms over the period 2004-2014, this study empirically examines the effects of macroeconomic and firm-specific uncertainty on firm leverage. We employ a dynamic panel data method, namely the robust two-step system GMM estimator on both the book and market leverage ratios. We further analyze the effects of macroeconomic and firm-specific uncertainty on firm debt maturity. The results provide strong evidence of the negative effects of macroeconomic and firm-specific uncertainty on firm leverage. The results also indicate that while short-term debt is adversely affected by both firm-specific and macroeconomic uncertainty, long-term debt is only affected by macroeconomic uncertainty. This implies that although the Philippine firms take into account both firm-specific and macroeconomic uncertainty in their financing decisions in the short-run, they are only concerned about the adverse effects of macroeconomic uncertainty in the long-run.
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