Trade Liberalization, Profitability, and Financial Leverage - ARCHIVED
Articles and reports: 11F0019M2005256
Description:
We investigate whether trade liberalization affects profitability and financial leverage, using Canadian data from the period following implementation of the Canada-U.S. Free Trade Agreement. We find that falling domestic tariffs are associated with declining profits and increasing leverage for import-competing firms, while falling foreign tariffs are associated with increasing profits and decreasing leverage for firms in export-oriented industries. This pattern is consistent with the "pecking order" theory of capital structure.
Issue Number: 2005256
Main Product: Analytical Studies Branch Research Paper Series
Format | Release date | More information |
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June 22, 2005 |
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