The relationship between asset and capital structure: a compositional approach with panel vector autoregressive models

<abstract> <p>The companies' investment and financing policies are dynamically interrelated there is no general consensus about the direction of this relationship. There theoretical arguments empirical evidence supporting both possible directions, which makes panel vector autoregressive models an appropriate tool. However, financial ratios normally used to assess relationship empirically tend be asymmetric, have extreme outliers non-linear relationships. The aim article propose a methodological approach address these issues by complementing with compositional data analysis. usefulness proposed methodology illustrated real Spanish retail companies, while reanalysis standard inconclusive.</p> </abstract>