• Article

Capital structure and abnormal returns

Sivaprasad, S. and Muradoglu, Y.G. 2012. Capital structure and abnormal returns. International Business Review. 21 (3), pp. 328-341.

TitleCapital structure and abnormal returns
AuthorsSivaprasad, S. and Muradoglu, Y.G.
Abstract

This paper examines the relation between capital structure and abnormal returns for UK equities. A firm's industry matters when examining this relation. Abnormal returns decline in firm gearing, however, abnormal returns increase as the average industry gearing in a risk class increases. Separating the average level of external financing in an industry from that in a particular firm is important. This study focuses on industry characteristics. Firms in nonregulated and competitive industries with low concentration ratios exhibit this behavior. In contrast, in the utilities risk class, abnormal returns increase in firm gearing which is similar to the findings of Modigliani and Miller (1958) which was unique to the utilities sector.

JournalInternational Business Review
Journal citation21 (3), pp. 328-341
ISSN0969-5931
YearJun 2012
PublisherElsevier
Digital Object Identifier (DOI)doi:10.1016/j.ibusrev.2011.03.007
Publication dates
PublishedJun 2012

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