Profitability and Financial Leverage: Evidence from a Quasi-Natural Experiment
利用一项增加部分企业市场势力的准自然实验，发现受处理企业盈利能力持续提升，但财务杠杆仅短暂下降后恢复原水平，且大、小企业调整方式不同。
The relationship between profitability and leverage is controversial in the capital structure literature. We revisit this relation in light of a novel quasi-natural experiment that increases market power for a subset of firms. We find that treated firms increase their profitability throughout the treatment period. However, they only transiently reduce financial leverage, gradually reverting to their preshock level. Firms respond differently according to size with large firms gradually adjusting their leverage toward a new target and small firms reducing it. The patterns are broadly consistent with dynamic trade-off models with both fixed and variable adjustment costs. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2021.4235 .