Macroeconomic risks and capital structure adjustment speed: The Chinese evidence

2021 ◽  
Author(s):  
Wei He ◽  
NyoNyo A Kyaw
Keyword(s):  
Capital Structure ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Macroeconomic Risks

Dynamic Capital Structure Adjustments and Business Group Affiliations: Indian Evidence

2017 ◽  
Vol 6 (1) ◽  
pp. 27-41 ◽  
Author(s):  
Biswajit Ghose ◽  
Kailash Chandra Kabra
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Agency Conflicts ◽  
Partial Adjustment ◽  
Leverage Ratio ◽  
Financial Firms ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Net Benefits ◽  
Target Leverage

This study examines the asymmetries in capital structure adjustment speed depending on firms’ affiliation to business groups. Using partial adjustment framework on a dataset of 2001 listed Indian non-financial firms over the period of 2005–2013, it was found that Indian firms annually adjusted about 37 percent of their deviation from target leverage. Groups firms, in general, adjust their leverage ratio slower than the stand-alone firms, suggesting lesser net benefits of adjustment for the former than the latter. The results are persistent irrespective of firms’ extent of deviation from their target leverage. However, the net benefits of adjustment and consequently the adjustment speed for both the groups of firms, irrespective of their extent of deviation from target leverage, seem to be alike, when they are over-levered and lower for group firms than the stand-alone firms, when they are under-levered. These findings indicate that both group and stand-alone firms face identical threats, when they are over-levered, whereas group firms possibly have alternative arrangements to reduce the owner–manager agency conflicts and tax liability, when they are under-levered. These findings are expected to prove helpful for financial managers in designing their capital structure based on ownership structure, and the nature and extent of deviation from the target leverage.

scholarly journals Optimum Capital Structure Adjustment Speed on Companies Listed in Indonesia Stock Exchange

2019 ◽  
Vol 15 (1) ◽  
pp. 60-68
Author(s):  
Suramaya Suci Kewal
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Business Risk ◽  
Trade Off ◽  
Significance Level ◽  
Optimal Capital Structure ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Optimal Capital

AbstractThis study examines the existence of adjustments in the speed of the company's capital structure to achieve an optimal capital structure in accordance with the dynamics of trade-off and other factors affecting the company's capital structure adjustment.   The optimal capital structure is estimated by using several variables, namely tangibility, firm size, profitability, liquidity, asset utilization, and business risk. The factors used to predict the optimal capital structure adjustment speed in this study are the distance between the capital structure and the optimal capital structure and financial deficit. The data analysis technique in this study is multiple linear regression with a significance level of 5%. The obtained results indicate that companies on the IDX are adjusting towards the optimal capital structure. The speed of adjustment is 0.128 so it can be concluded that the company's adjustment remains below its optimal debt level. The test results also prove that distance and financial deficit/surplus have no influence on the company's capital structure adjustment speed. Keywords: capital structure, dynamics trade offKecepatan Penyesuaian Struktur Modal Optimal Perusahaan di Bursa Efek IndonesiaAbstrakPenelitian ini menguji keberadaan penyesuaian kecepatan struktur modal perusahaan menuju ke struktur modal optimal sesuai dengan dynamics trade off dan faktor-faktor yang mempengaruhi kecepatan penyesuaian struktur modal optimal perusahaan. Struktur modal optimal diestimasi dengan menggunakan beberapa variabel yaitu tangibility, firm size, profitability, liquidity, asset utilization, dan business risk. Faktor-faktor yang digunakan untuk menduga kecepatan penyesuaian struktur modal optimal pada penelitian ini adalah jarak antara struktur modal dengan struktur modal optimal (distance) dan financial deficit/surplus. Teknik analisis data yang digunakan pada penelitian ini adalah regresi linier berganda dengan tingkat signifikansi sebesar 5%. Hasil yang diperoleh menunjukkan perusahaan-perusahaan di BEI melakukan penyesuaian menuju struktur modal optimal. Kecepatan penyesuaian sebesar 0,128 sehingga dapat disimpulkan bahwa perusahaan-perusahaan melakukan penyesuaian masih di bawah tingkat hutang optimalnya. Hasil pengujian juga membuktikan bahwa tidak terdapat pengaruh distance dan financial deficit/surplus terhadap kecepatan penyesuaian struktur modal perusahaan. Kata Kunci: struktur modal, dynamics trade off

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.

scholarly journals STRUKTUR MODAL OPTIMAL DAN KECEPATAN PENYESUAIAN: STUDI EMPIRIS DI BURSA EFEK INDONESIA

2017 ◽  
Vol 20 (3) ◽  
pp. 305
Author(s):  
Firda Nosita
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Practical Implication ◽  
Trade Off ◽  
Optimal Capital Structure ◽  
Financial Firms ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Optimal Capital ◽  
Target Leverage

The research investigate whether non-financial firms listed on the Indonesian Stock Exchange made capital structure adjustment towards optimal capital structure and the determinants of adjustment speed in context of trade-off theory for 2009-2014 period. Existence of tax benefit that generates by debt interest payment causing firms arranged their capital structure in order to maximize debt utilizing. Debt utilizing would be make default problem and bankruptcy if it excess firm’s capacity that determine by some firm’s characteristic. Because of optimal capital structure unobservable, so they will be estimate by using some variable which are influencing in capital structure arrangement such tangibility. profitability, size and growth opportunities. The results indicate that non-financial firms in Indonesia follows dynamic trade-off theory with make capital structure adjustment towards optimal capital structure but still underleveraged and need 2,45 years to adjust their capital structure. Distance between actual capital structure and optimal capital structure and financial surplus/deficit are influenced speed of adjustments, while current liabilities is not influenced speed of adjustment. Thus, the practical implication is the companies must be consider and compare their actual capital structure and their optimal capital structure in order to get the benefit from the adjustment by not adding the posibility of bankruptcy due to these adjustment. Capital structure decision also related with various external policy, for instance, accesability to external funding such as creditors, investor and government which influence their adjustment. This research has some limitation, proxies are used in determining the target leverage was only four variables and this study did not addres macroeconomic variables that may affect the adjustment and adjustment speed.

scholarly journals Speed of Adjustment Capital Structure

2018 ◽  
Vol 7 (4) ◽  
pp. 516-527
Author(s):  
Ely Yulianita Sibuea ◽  
Arief Yulianto
Keyword(s):  
Capital Structure ◽  
Fixed Effect Model ◽  
Company Size ◽  
Business Risk ◽  
Speed Of Adjustment ◽  
Effect Model ◽  
Structure Adjustment ◽  
Adjustment Speed ◽  
Multiple Regression Method ◽  
Asset Growth

The aim of this study is to analyze the effect of company size variables, asset growth, asset structure and business risk against capital structure adjustment speed with dynamic approach. The number of samples in this study was 63 companies by using purposive sampling method. Multiple regression method with fixed effect model was used as data analysis in this study. The results of this study indicate that company size and asset structure have positive significant effect on capital structure adjustment speed, whereas asset growth has significant negativeeffect on capital structure adjustment speed and business risk does not have significanteffect on capital structure adjustment speed.  

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