QUEEN’S BUSINESS SCHOOL FINANCE SEMINAR SERIES

Wednesday 9^th October

1pm

“Inequality and Capital Structure”

Abstract:

High-income individuals direct a higher share of their savings toward the stock market and a lower share toward credit markets and (especially) bank deposits. An increase in income inequality thus translates into a decrease in the relative supply of debt capital. Nonfinancial corporations appear to actively cater to these shifts by adjusting their capital structure. The verified negative relation between inequality and leverage is confirmed when exploiting for identification: an instrumental variable approach; variation in inequality across US states or across countries; variation across firms in their exposure to local inequality; and the introduction of the euro as an exogenous shock to European firms' relative exposure to domestic and foreign investors.

Dr Stefano Lugo

Utrecht University.

The working paper can be found via . https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4672226

Please contact Yangke Liu (Yangke.Liu@qub.ac.uk) if you wish to schedule a meeting with Stefano, after the seminar.

QBS Conference Hub, Seminar Room 01.012