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Trade liberalization, profitability, and financial leverage

30 Aug 2004

Investigates whether trade liberalization affects profitability and financial leverage, using Canadian data from the period following implementation of the Canada-U.S. Free Trade Agreement. Find that falling domestic tariffs are associated with declining profits and increasing leverage for import-competing firms, while falling foreign tariffs are associated with increasing profits and decreasing leverage for firms in export-oriented industries. This pattern is consistent with the "pecking order" theory of capital structure.
economics economy export finance exchange rate science and technology business debt employment exports free trade interest investments labour mathematics profit earnings trade liberalization regression capital structure business finance regressions instrumental variables estimation dependent and independent variables significance interaction (statistics) dependent variable financial leverage

Authors

Baggs, Jennifer Jane

ISBN
0662408373
Pages
32
Published in
Canada

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