Purpose – This paper aims to test the significance of unobservable firm-specific effects on a capital structure model. Design/methodology/approach – The paper employs the restricted least squares method to test the significance of unobservable firm-specific effects in a fixed effects model...

This paper presents a new research design to test the efficacy of the Arbitrage Pricing Theory of Ross [1976], similar to that applied by Christofi, Christofi and Philippatos [1993]. In particular, we use a combination of factor analysis and canonical correlation to test the underlying...

The objective of this paper is to demonstrate how to use the Elton, Gruber, and Padberg [1978] model to construct optimal portfolios and to facilitate the use of this paradigm by providing an example of how the technique is used. The EGP model uses the risk‐adjusted, excess return for an asset...

Purpose – The purpose of this paper is to examine the role of industry peers in shaping firm debt maturity decisions. Design/methodology/approach – The authors use idiosyncratic equity shocks as instruments to disentangle industry fixed and peer effects. The authors also employ a three-stage...