CEU Electronic Theses and Dissertations, 2018
| Author | Karimli, Tural |
|---|---|
| Title | The Impact of Cash Flow Volatility on Corporate Debt Decisions |
| Summary | In this thesis, I study whether financial market imperfections influence the corporate debt decisions. The theoretical literature on optimal capital structure provides us with a unified framework on the relationship between the variance of company income stream and its leveraging level. However, the empirical work has not been able to reach conclusive results. I do empirical analysis on the response of corporate debt level and its maturity structure to the dynamics of cash flow volatility using most recent data and synthesis of previous findings. My empirical results confirm that firms debt decisions tend to be affected negatively by the increasingly volatile environment. Moreover, the marginal change in debt with longer maturity tends to be higher in absolute terms than the one with shorter maturity, which reflects increasing cost of financial distress. Consequently, financial imperfections contribute significantly to the firm leveraging decisions. |
| Supervisor | Zawadowski, Adam |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2018/karimli_tural.pdf |
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