Question
Assume that you are interested in examining the effect of earnings volatility (uncertainty) on firms target capital structure using a panel data of firms listed
Assume that you are interested in examining the effect of earnings volatility (uncertainty) on firms target capital structure using a panel data of firms listed on Palestine Exchange between 2012 and 2019. In light of your study of capital structure decisions, you think that earnings volatility is a determinant factor of capital structure. Moreover, you reason that earnings volatility effect on leverage targets is greater than the impact of firm size, market-to-book ratio, assets tangibility, R&D intensity, ..., and it is the most critical among all time-varying determinants of leverage targets. Further, you think that high level of uncertainty decreases debt tax shields, increases potential financial distress costs, and exacerbates debtholdershareholder conflicts, thereby leading to a lower optimal target of capital structure
C. Indicate the type of model(s) you are going to use.
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