Current literature has suggested that many factors affect a firm's capital structure decision and firms do not change their capital structure very often. Such a quot;stablequot; structure has prompted Lemmon, Roberts, and Zender (2007) to advocate the use of firm fixed effect in capital...

Despite the known statistical problems with pooled regression specifications, we argue that current literature has identified a good list of factors that affect firms' capital structure decisions. In particular, to address the potential biases in both pooled and fixed effects specifications, we...