Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Monte Carlo simulations and capital structure research
AU - Chang, Xin
AU - Dasgupta, Sudipto
PY - 2011/3
Y1 - 2011/3
N2 - The evolution of the debt ratio under alternative types of managerial behavior can generate non-standard leverage processes. This creates problems for statistical inference in empirical capital structure research. We argue in this paper that when the data generating process is not standard, a useful way to evaluate the appropriateness of inferences and the empirical methodology is via Monte Carlo simulations that mimic the data generating process under alternative assumptions about managerial behavior. We illustrate with several examples
AB - The evolution of the debt ratio under alternative types of managerial behavior can generate non-standard leverage processes. This creates problems for statistical inference in empirical capital structure research. We argue in this paper that when the data generating process is not standard, a useful way to evaluate the appropriateness of inferences and the empirical methodology is via Monte Carlo simulations that mimic the data generating process under alternative assumptions about managerial behavior. We illustrate with several examples
U2 - 10.1111/j.1468-2443.2011.01126.x
DO - 10.1111/j.1468-2443.2011.01126.x
M3 - Journal article
VL - 11
SP - 19
EP - 55
JO - International Review of Finance
JF - International Review of Finance
SN - 1468-2443
IS - 1
ER -