This article analyses whether leverage affects firm value and does so using a panel of 196 Taiwanese listed companies during the 13-year (1993–2005) period. We employ an advanced panel threshold regression model to test whether there is a ‘threshold’ debt ratio which causes there to be asymmetrical relationships between debt ratio and firm value. We adopt Tobin's Q as proxy for firm value. We find that there are two threshold effects between debt ratio and firm value, and these are 9.86% and 33.33%. When the debt ratio is less than 9.86%, Tobin's Q (i.e. firm value) increases by 0.0546%, with an increase of 1% in the debt ratio. When the debt ratio is between 9.86% and 33.33%, we find Tobin's Q increases by only 0.0057%, with an increase of 1% in the debt ratio. But when the debt ratio is greater than 33.33%, there is no relationship between debt ratio and firm value. We therefore conclude that there must be a threshold debt ratio of less than 33.33% at which point firm value stops increasing. These results are consistent with the trade-off theory, which suggests that there is a static amount of debt which prompts managers to find the ‘optimal capital structure’ that maximizes firm value when the benefits of debt equal the marginal cost of debt.

The current study employs a Granger causality test within a Quantile approach investigating CO₂ emission determinants in China. Results show urbanization, financial development and openness to trade are leading determinants of CO₂ emissions in China. These results highlight climate change issues while taking advantage of a new methodology to fill a gap in the current literature. Our findings show key implications for PRC government policy related to pollutant reduction policy.

The hysteresis hypothesis in unemployment for ten European countries are tested using newly developed Panel SURADF tests of Breuer et al. ( 2001 Breuer, JB , McNown, R and Wallace, MS . 2001. Misleading inferences from panel unit-root tests with an illustration from purchasing power parity. Review of International Economics, 9(3): 482–93. [Crossref] [Google Scholar] ) for the 1961–1999 period. While the other Panel-based unit root tests are joint tests of a unit root for all members of the panel and are incapable of determining the mix of I(0) and I(1) series in the panel setting, the Panel SURADF tests a separate unit-root null hypothesis for each individual panel member and, therefore identifies how many and which series in the panel are stationary processes. The hysteresis hypothesis is confirmed for all the European countries except Belgium and the Netherlands when Breuer et al.'s Panel SURADF tests are conducted.