Kiều Phương - Profile on Academia.edu (original) (raw)
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This paper applied the Generalized Method of Moment (GMM) to estimate the effect of leverage on f... more This paper applied the Generalized Method of Moment (GMM) to estimate the effect of leverage on firm values and contextual variables influencing on this relationship. Using 645 companies listed in Taiwan Securities Exchange (TSE) from 2000-2009. The empirical results show as follows: Firstly, the values of leveraged firm are greater than that of an unleveraged firm if we don't consider bankruptcy probability. Secondly, If we consider the benefit and cost of debt simultaneously, the leverage is significantly positively related to the firm value before reaching firm' optimal capital structure. Thirdly, the positive influence of leverage to the firm value tends to be stronger when the firm financial quality is better (i e., the greater Z-score). This finding can provide the insight into the firm debt finance decision to maximize the firm value.
This paper applied the Generalized Method of Moment (GMM) to estimate the effect of leverage on f... more This paper applied the Generalized Method of Moment (GMM) to estimate the effect of leverage on firm values and contextual variables influencing on this relationship. Using 645 companies listed in Taiwan Securities Exchange (TSE) from 2000-2009. The empirical results show as follows: Firstly, the values of leveraged firm are greater than that of an unleveraged firm if we don't consider bankruptcy probability. Secondly, If we consider the benefit and cost of debt simultaneously, the leverage is significantly positively related to the firm value before reaching firm' optimal capital structure. Thirdly, the positive influence of leverage to the firm value tends to be stronger when the firm financial quality is better (i e., the greater Z-score). This finding can provide the insight into the firm debt finance decision to maximize the firm value.