Capital Structure Adjustment Speed and Expected Returns: Examination of Information Asymmetry as a Moderating Role

Masoud Taherinia, Mehrdad Matin, Jamal Valipour, Kavian Abdolahi, Peyman Shouryabi and Mohammad Mahdi Barzegar

Papers from arXiv.org

Abstract: Shareholders' expectations of stock returns and fluctuations are constantly changing due to restrictions in financial status and undesirable capital structure, which constrain managers to limit the changes in price trends in order to cover the risk instigated and infused by the unfavorable situation. The present research examines the moderating impact of information asymmetry on the relationship between capital structure adjustment and expected returns. The data from 120 companies approved in the Tehran Stock Exchange were extracted, and a hybrid data regression model was used to test the research hypotheses. Findings indicate that the capital structure adjustment speed correlates with the expected returns. Moreover, the information asymmetry positively affects the relationship between capital structure adjustment speed and expected returns.

Date: 2024-03
New Economics Papers: this item is included in nep-cfn and nep-fmk
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