Non-linear relationships between growth opportunities and debt: Evidence from quoted Portuguese companies

Stock listing and financial flexibility

“…Analogue to Almeida and Campello (2008), lags two and three of the dependent variable and the endogenous regressors (i.e., ΔCash and Lev) form the instruments in addition to the exogenous regressors (i.e., Size, Growth, CF). As in Serrasqueiro and Nunes (2010), the Sargan test of overidentifying restrictions and direct tests of serial correlation in the residuals evaluates the validity of using lagged values of endogenous regressors as instruments.…”

Tax effect on Spanish SME optimum debt maturity structure

“…Capital structure research often employs this approach (Flannery and Rangan, 2006;López-Gracia andSogorb-Mira, 2008 andSerrasqueiro andNunes, 2009), but not so maturity structure (Antoniou et al, 2006;Ozkan, 2000). As optimum debt structure is not observable, the model endogenizes optimum debt structure by replacing it with a vector of observable explanatory variables.…”

Firm Size as Determinant of the Nonlinear Relationship Between Bank Debt and Growth Opportunities: The Case of Chilean Public Firms

“…In our case, the only variable that presents this problem is the growth opportunity set. According to the previous empirical literature on capital structure decisions, the growth opportunity set seems to be an endogenous variable (Bevan and Danbolt 2004;Billett et al 2007;Danbolt et al 2002;Dang 2011;Goyal et al 2002;Krishnaswami and Subramaniam 1999;López and Sogorb 2008;Moon and Tandon 2007;Saona 2010;Saona and Vallelado 2005;Serrasqueiro and Nunes 2010). We require at least two years' lag to allow the explanatory variable to be introduced as an instrument.…”

“…Theoretical perspectives suggest several reasons to obtain financing from different sources other than bank lending, but no consensus exists about the expected relationship between firm growth opportunities and the level of bank debt (Serrasqueiro and Nunes 2010). According to the pecking-order theory (Myers 1984;Myers and Majluf 1984), if companies choose to borrow from external sources, they have to decide whether it is more convenient to borrow from private lenders (banks and other financial institutions) or public lenders (corporate bonds).…”