Language:

Testing Theories of Capital Structure and Estimating the Speed of Adjustment

Journal of financial and quantitative analysis, 2009-04, Vol.44 (2), p.237-271 [Peer Reviewed Journal]

Copyright © Michael G. Foster School of Business, University of Washington 2009 ;Copyright 2009 Michael G. Foster School of Business ;Copyright University of Washington, School of Business Administration Apr 2009 ;ISSN: 0022-1090 ;EISSN: 1756-6916 ;DOI: 10.1017/S0022109009090152 ;CODEN: JFQAAC

Full text available

Citations Cited by

Actions
1. Add to My Research
2. Remove from My Research
3. E-mail
4. Print
5. Permalink
6. Citation
7. EasyBib
8. EndNote
9. RefWorks
10. Delicious
11. Export RIS
12. Export BibTeX

Title:
Testing Theories of Capital Structure and Estimating the Speed of Adjustment
Author: Huang, Rongbing ; Ritter, Jay R.
Subjects: Adjustment ; Adjustment costs ; Capital costs ; Capital structure ; Companies ; Corporate finance ; Cost of capital ; Cost of equity ; Debt financing ; Debt to equity ratio ; Deficit financing ; Econometrics ; Equity ; Equity capital ; Estimation bias ; Estimators ; Financial leverage ; Financial securities ; Financing ; Financing methods ; Impact analysis ; Leverage ; Studies ; Time series ; U.S.A
Is Part Of: Journal of financial and quantitative analysis, 2009-04, Vol.44 (2), p.237-271
Description: This paper examines time-series patterns of external financing decisions and shows that publicly traded U.S. firms fund a much larger proportion of their financing deficit with external equity when the cost of equity capital is low. The historical values of the cost of equity capital have long-lasting effects on firms’ capital structures through their influence on firms’ historical financing decisions. We also introduce a new econometric technique to deal with biases in estimates of the speed of adjustment toward target leverage. We find that firms adjust toward target leverage at a moderate speed, with a half-life of 3.7 years for book leverage, even after controlling for the traditional determinants of capital structure and firm fixed effects.
Publisher: New York, USA: Cambridge University Press
Language: English
Identifier: ISSN: 0022-1090
EISSN: 1756-6916
DOI: 10.1017/S0022109009090152
CODEN: JFQAAC
Source: Alma/SFX Local Collection
ProQuest Central

Back to results list


INSPIRE LIBRARY - TON DUC THANG UNIVERSITY	(84-028) 37 755 057	Feedback
19 Nguyen Huu Tho St. Dist.7, HCM	thuvien@tdtu.edu.vn	Feedback

Testing Theories of Capital Structure and Estimating the Speed of Adjustment

Copyright © Michael G. Foster School of Business, University of Washington 2009 ;Copyright 2009 Michael G. Foster School of Business ;Copyright University of Washington, School of Business Administration Apr 2009 ;ISSN: 0022-1090 ;EISSN: 1756-6916 ;DOI: 10.1017/S0022109009090152 ;CODEN: JFQAAC

Searching Remote Databases, Please Wait