On corporate capital structure adjustments
Viet Dang and
Ian Garrett
Finance Research Letters, 2015, vol. 14, issue C, 56-63
Abstract:
Recent research has examined asymmetries in firms’ adjustments toward target leverage. Assuming firms mainly adjust their debt levels, Byoun (2008) finds that firms adjusting most quickly possess two important characteristics: above-target debt and a financing surplus. Using alternative models allowing for adjustments in both debt and total assets, we still find evidence of asymmetries in leverage adjustments, but that firms adjusting fastest have above-target leverage and a financing deficit. Our paper shows how alternative assumptions about leverage dynamics may lead to different conclusions about target adjustment behavior.
Keywords: Capital structure; Dynamic trade-off theory; Partial adjustment model; Asymmetric adjustment; Model specification (search for similar items in EconPapers)
JEL-codes: C10 C13 G30 G32 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:14:y:2015:i:c:p:56-63
DOI: 10.1016/j.frl.2015.05.016
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