Proceedings of 6th Annual American Business Research Conference
9 - 10 June 2014, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-52-8
Firm Leverage Decision: Does Industry Matter?
Silvia Z Islama and Sarod Khandaker b
We use a standard capital structure model to investigate the firm leverage decision of 1620
companies listed in Australian stock exchange (ASX) in a span of thirteen years (2000-2012)
by dividing the sample into mining and other industries (non-mining). We also test the
significant differences in leverage decision between these two groups by applying the dummy
variable approach. Our findings show that fundamental differences exist in mining and nonmining companies while making leverage decisions. We find evidence that mining firms are
more sensitive to profitability and asset tangibility where neither profitability nor asset tangibility
has significant effect on non-mining firms. Overall result suggests that the types of industries
do matter while making firm leverage decision.
Keywords: Leverage, Mining firms, Profitability, Asset Tangibility, Dummy variable.
JEL Classifications: G3, G30, G32
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a
Dr. Silvia Z Islam , School of Economics, Finance and Marketing, Royal Melbourne Institute of Technology University,
Australia
b
Dr. Sarod Khandaker , Centre for Enterprise and performance, Swinburne University of Technology, Australia