Corporate deleveraging. Lessons from the Polish experience (2006 – 2017).

  • Christophe Cathala Szkoła Główna Handlowa w Warszawie
Keywords: Debt, excessive leverage, capital structure theories,


How long do firms need time to reduce their debt level? We know from literature that the process is not rapid and mainly justified by the need to ensure financial flexibility in case of opportunities in the near future. Our purpose is to observe the behaviour of Polish firms in such process and the time needed (if any) to come back to their bottom border in terms of debt level. Our focal point is to appreciate if we have differences between firms in terms of size and sectors which could influence capital structure theories. The debt level defined is the debt net ratio, observed over 12 years (from 2006 to 2017) with a trough level estimated at the median of the ratio over such period. In line with previous studies, we find that the process to come back to the trough is not so rapid. However, and it is the originality of our article, we find significant differences between firms in terms of size (3.27 years for small firms against 5.13 years for medium firms and 4.53 years for large firms) and in terms of sectors. Our findings are consistent with a capital structure theory which focuses on differences between firms in terms of size and sectors to generalize some consistent and recurrent behaviours towards debt.


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