Macroeconomic Condition, Firm’s Financial Characteristics and Capital Structure Dynamic Adjustment

Zhi-xiong Ling () and Ya-wei Lin ()
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Zhi-xiong Ling: Hunan University
Ya-wei Lin: Hunan University

Chapter Chapter 12 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 113-120 from Springer

Abstract: Abstract With a sample of listed companies from 2000 to 2010 and using Generalized method of moment (GMM), the paper researches the impacts of firms characteristics and macroeconomic factors on capital structure dynamic adjustment towards target leverage. Using integrated dynamic partial adjustment capital structure model, we find evidence that, relative to in bad macroeconomic states, firms adjust their leverage towards target faster in good states, and that large size firms adjust their leverage towards target faster than small size firms. So dose high growth firms. Our result also prove that, since small size firms are unable to adjust their leverage in time, especially in period of economic recession, they are more likely to face financial difficulties and capital chain ruptures.

Keywords: Capital structure; Dynamic adjustment; Firm’s characteristics; Macroeconomic condition (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-38442-4_12

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DOI: 10.1007/978-3-642-38442-4_12

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