  Current study aims to provide new empirical evidence on the impact of debt on
corporate profitability. This impact can be explained by three essential
theories: signaling theory, tax theory and the agency cost theory. Using panel
data sample of 2240 French non listed companies of service sector during
1999-2006. By utilizing generalized method of moments (GMM) econometric
technique on three measures of profitability ratio (PROF1, PROF2 and ROA), we
show that debt ratio has no effect on corporate profitability, regardless of
the size of company (VSEs, SMEs or LEs)
