The effect of debt on corporate profitability : Evidence from French service sector

2013/01/01 by Mazen Kebewar, Kebewar, Mazen
Business, Management and Accounting · Economics, Econometrics and Finance · #Corporate Finance and Governance #FOS: Economics and business #Financial Reporting and Valuation Research #General Finance (q-fin.GN) #Working Capital and Financial Performance #q-fin.GN

paper · pdf · doi:10.48550/arxiv.1301.0072

openalex publication_date 2013/01/01 · arxiv created 2014/03/30 · arxiv updated 2014/04/01 · openalex created_date 2021/02/01 · openalex updated_date 2026/07/28

Abstract

Current study aims to provide new empirical evidence on the impact of debt on corporate profitability. This impact can be explained by three essential theories: signaling theory, tax theory and the agency cost theory. Using panel data sample of 2240 French non listed companies of service sector during 1999-2006. By utilizing generalized method of moments (GMM) econometric technique on three measures of profitability ratio (PROF1, PROF2 and ROA), we show that debt ratio has no effect on corporate profitability, regardless of the size of company (VSEs, SMEs or LEs)

Citations

• Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations
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