EFFECTS OF INFLATION ON CAPITAL STRUCTURE |
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| Authors: | Moon K. Kim Chunchi Wu |
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| Affiliation: | Syracuse University, Syracuse, NY 13244. The authors thank two anonymous referees for their many suggestions for improvements. Any remaining errors are the sole responsibility of the authors. |
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| Abstract: | ![]()
The purpose of this study is to examine the aggregate capital structure based on several factors that affect the demand for and supply of corporate debt. The main hypotheses are that under inflation the larger the amount of depreciation and the larger the yield differences between corporate and municipal bonds and between corporate bonds and equities, the larger the amount of corporate debt. The empirical tests performed in this study support these hypotheses. |
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