scholarly journals Dynamic Capital Structure Adjustment and the Impact of Fractional Dependent Variables

2011 ◽  
Author(s):  
Ralf Elsas ◽  
David Florysiak
Keyword(s):  
Capital Structure ◽  
Structure Adjustment ◽  
Dependent Variables ◽  
The Impact ◽  
Dynamic Capital Structure

scholarly journals Dynamic Capital Structure Adjustment and the Impact of Fractional Dependent Variables

2015 ◽  
Vol 50 (5) ◽  
pp. 1105-1133 ◽  
Author(s):  
Ralf Elsas ◽  
David Florysiak
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Unobserved Heterogeneity ◽  
Speed Of Adjustment ◽  
Structure Adjustment ◽  
Dependent Variables ◽  
Target Leverage ◽  
The Impact ◽  
Biased Estimates ◽  
Structure Research

AbstractResearchers in empirical corporate finance often use bounded ratios (e.g., debt ratios) as dependent variables in their regressions. Using the example of estimating the speed of adjustment toward target leverage, we show by Monte Carlo and resampling experiments that commonly applied estimators yield severely biased estimates, as they ignore that debt ratios are fractional (i.e., bounded between 0 and 1). We propose a new unbiased estimator for adjustment speed in the presence of fractional dependent variables that also controls for unobserved heterogeneity and unbalanced panel data. This new estimator is suitable for corporate finance applications beyond capital structure research.

scholarly journals The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Razali Haron ◽  
Naji Mansour Nomran ◽  
Anwar Hasan Abdullah Othman ◽  
Maizaitulaidawati Md Husin ◽  
Ashurov Sharofiddin
Keyword(s):  
Capital Structure ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Dynamic Environment ◽  
Order Theory ◽  
Ownership Concentration ◽  
Content Type ◽  
Dynamic Panel Model ◽  
The Impact ◽  
Dynamic Capital Structure

Purpose This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories. Design/methodology/approach This study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern. Findings Growing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory. Research limitations/implications This study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry. Originality/value The insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature.

Firm Characteristics and Dynamic Capital Structure Adjustment

2006 ◽  
Author(s):  
Wolfgang Drobetz ◽  
Pascal Pensa ◽  
Gabrielle Wanzenried
Keyword(s):  
Capital Structure ◽  
Firm Characteristics ◽  
Structure Adjustment ◽  
Dynamic Capital Structure

Supply-side structural reform and dynamic capital structure adjustment: Evidence from Chinese-listed firms

2021 ◽  
Vol 65 ◽  
pp. 101482
Author(s):  
Xiaochen Jiang ◽  
Jim Huangnan Shen ◽  
Chien-Chiang Lee ◽  
Chong Chen
Keyword(s):  
Capital Structure ◽  
Structural Reform ◽  
Supply Side ◽  
Listed Firms ◽  
Structure Adjustment ◽  
Dynamic Capital Structure

scholarly journals Impact Of Firm Specific Factors On Capital Structure Decision: An Empirical Study Of Albanian Firms.

2013 ◽  
Vol 2 (4) ◽  
pp. 135 ◽  
Author(s):  
Anila Çekrezi
Keyword(s):  
Capital Structure ◽  
Return On Assets ◽  
Balance Sheets ◽  
Listed Firms ◽  
Natural Logarithm ◽  
Total Debt ◽  
Dependent Variables ◽  
Specific Factors ◽  
The Impact

This paper attempts to explore the impact of firm specific factors on capital structuredecision for a sample of 65 non- listed firms, which operate in Albania, over the period2008-2011.In this paper are used three capital structure measures ; short –term debt tototal assets (STDA), long- term debt to total assets (LTDA) and total debt to total assets(TDTA) as dependent variables and four dependent variables: tangibility(TANG),liquidity (LIQ), profitability(ROA=return on assets) and size (SIZE). The investigationuses panel data procedure and the data are taken from balance sheets and include onlyaccounting measures on the firm’s leverage. This study found that tangibility (the ratio offixed assets to total assets), liquidity (the ratio of current assets to current liabilities)profitability (the ratio of earnings after taxes to total assets) and size (natural logarithm oftotal assets) have a significant impact on leverage. Also empirical evidence reveals asignificant negative relation of ROA to leverage and a significant positive relation ofSIZE to leverage. And the second objective of this study is to identify the impact ofindustry classification on firm’s leverage, using a dummy variable for the trade sector. Soone of the hypothesis tested is if financial leverage is independent of industryclassification. Results reveal that long term debt to total assets and total debt to totalassets ratios are significantly different across Albanian industries.

Bank ownership and dynamic capital structure adjustment of firms: evidence from China*

2016 ◽  
Vol 4 (2) ◽  
pp. 143-164
Author(s):  
Sheng Zhang ◽  
Keyuan Zhang ◽  
Min Zhang
Keyword(s):  
Capital Structure ◽  
Structure Adjustment ◽  
Bank Ownership ◽  
Dynamic Capital Structure

Trade Credit and Capital Structure Adjustment Speed: Evidence From Chinese Listed Firms

2021 ◽  
Vol 24 (01) ◽  
pp. 2150002
Author(s):  
Jifeng Cao ◽  
Yiwen Cui
Keyword(s):  
Capital Structure ◽  
Trade Credit ◽  
Positive Impact ◽  
Low Cost ◽  
Listed Firms ◽  
Accounts Payable ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Target Leverage ◽  
The Impact

This paper examines the impact of trade credit on the speed of capital structure adjustment toward target leverage using an integrated dynamic partial adjustment model. Trade credit is an important substitute for debt financing and gives firms a low-cost means of adjusting leverage toward the target capital structure in China. We measure trade credit by accounts payable. Using the public listed company data from 1998 to 2016, we find that trade credit accelerates capital structure adjustment. The asymmetric impacts on the capital structure adjustment speed in different situations are also evidenced. The positive impact of trade credit on the speed of capital structure adjustment is more pronounced for over-levered firms. The trade credit also accelerates the speed of capital structure adjustment more quickly for high market share firms. Our results imply that firms use trade credit to save cash flow and restore the leverage level to the target capital structure in China.

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