Skip to main content

Capital Structure in the United States Forest Products Industry: The Influence of Debt and Taxes

Buy Article:

$29.50 plus tax (Refund Policy)

Abstract:

This article investigates financing practices across firms in the forest products industry by studying the relationship between debt and taxes hypothesized in finance theory. In testing the theoretical relationship between taxes and capital structure for 20 publicly traded forest industry firms for the years 1994–2003, we find a negative relationship between profitability and debt, a positive relationship between nondebt tax shields and debt, and a negative relationship between firm size and debt. All three results run counter to theoretical expectations. Results indicate that, controlling for size, firms in the forest products industry with higher market valuations and pretax earnings used more conservative financing strategies. Also, the article develops a dynamic panel model with fixed effects for each firm and residualization to address issues of multicollinearity.

Keywords: Finance; leverage

Document Type: Research Article

Publication date: 2006-10-01

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
  • Submit a Paper
  • Membership Information
  • Author Guidelines
  • Podcasts
  • Ingenta Connect is not responsible for the content or availability of external websites
  • Access Key
  • Free ContentFree content
  • Partial Free ContentPartial Free content
  • New ContentNew content
  • Open Access ContentOpen access content
  • Partial Open Access ContentPartial Open access content
  • Subscribed ContentSubscribed content
  • Partial Subscribed ContentPartial Subscribed content
  • Free Trial ContentFree trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more