Capital Structure Adjustments and Asymmetric Information
MPRA Paper from University Library of Munich, Germany
The findings of this paper suggest another reason for capital structure adjustments besides the Trade-Off and Pecking Order theories propositions because asymmetric information impacts capital structure changes and deviations o nly for a quarter whilst stationarity impacts them for 4 quarters, even when controlled. Asymmetric information has been measured by Corwin-Schultz bid ask spread estimator and capital structure target as the mean of debt to equity ratio of 262 Nyse non-financial and non-regulated companies and their industries during 91 quarters. The data were analyzed with Johansen-Fisher panel cointegration. The capital structure deviations last from 2 to 4 quarters and move toward a target.
Keywords: capital structure adjustments; Corwin-Schultz bid ask spread estimator; asymmetric information; Johansen-Fisher panel cointegration; dynamic trade-off theory; market microstructure (search for similar items in EconPapers)
JEL-codes: C33 D82 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-ore
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Published in International Journal of Economics and Finance 11.12(2019): pp. 1-14
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:96936
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