Is the Partial Adjustment Model a Useful Tool for Capital Structure Research?*

2010 ◽  
Vol 16 (3) ◽  
pp. 733-754 ◽  
Author(s):  
Armen Hovakimian ◽  
Guangzhong Li
Keyword(s):  
Capital Structure ◽  
Partial Adjustment ◽  
Adjustment Model ◽  
Partial Adjustment Model ◽  
Structure Research

scholarly journals Comparison of Determinants of Capital Structure in Lippo Group and Bakrie Group Companies Listed on the Indonesia Stock Exchange (Partial Adjustment Model Approach)

2021 ◽  
Vol 8 (2) ◽  
pp. 83-88
Author(s):  
Fildzah Fitria ◽  
Khaira Amalia Fachrudin ◽  
Amlys Syahputra Silalahi
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Company Size ◽  
Group Company ◽  
Partial Adjustment ◽  
Insignificant Effect ◽  
Adjustment Model ◽  
Growth Opportunity ◽  
Partial Adjustment Model ◽  
Model Approach

This study aims to determine the determinants of the capital structure of the Lippo Group and the Bakrie Group listed on the Indonesia Stock Exchange using the partial adjustment model approach. The population in the Lippo Group company is 12 and the population at the Bakrie Group company is 9. The sample of this study is that all companies listed on the Indonesia Stock Exchange are 21 companies. Data analysis used panel data regression method with partial adjustment model approach. The results of the research in the t test at the Lippo Group company show that the lag leverage has a positive and insignificant effect on leverage, profitability has a positive and significant effect on leverage, company size has a positive and insignificant effect on leverage, earning volatility has a positive and significant effect on leverage, assets tangibility has a positive and significant effect on leverage and growth opportunity has a positive and insignificant effect on leverage. The results of the research in the t test at the Bakrie Group company show that the lag leverage has a positive and insignificant effect on leverage, profitability has a positive and insignificant effect on leverage, company size has a positive and insignificant effect on leverage, earning volatility has a positive and insignificant effect on leverage, assets tangibility has a negative and insignificant effect on leverage, growth opportunity has a negative and insignificant effect on leverage. The partial adjustment model test results show that only Lippo Group company on the variables of profitability, earning volatility and assets tangibility have a significant positive effect on leverage. The results of the comparison of the optimal capital structure show that the Bakrie Group has a higher level of optimal capital structure by 83% than the Lippo Group at 55%. Keywords: Lag Leverage, Profitability, Company Size, Earning Volatility, Assets Tangibility, Growth Opportunity, Leverage.

scholarly journals MANAGING THE GAP BETWEEN ACTUAL AND TARGET CAPITAL STRUCTURE: AN EVIDENCE FROM PAKISTAN

2019 ◽  
Vol 1 (2) ◽  
pp. 1-8
Author(s):  
ABDUL RAFAY ◽  
USMAN JAVED GILANI ◽  
FARRUKH IJAZ
Keyword(s):  
Capital Structure ◽  
Price Change ◽  
Share Price ◽  
Partial Adjustment ◽  
Adjustment Model ◽  
Partial Adjustment Model ◽  
Adjustment Speed ◽  
One Year ◽  
Target Leverage ◽  
A Company

Investment framework is one of the most significant components that impact the company’s value. Reliable funding choices for a company generally lead to a capital structure that increases the firm’s value (Abor, 2006). Early studies provide contradictory reviews about a company’s capital structure decisions. This paper investigates the partial adjustment model for a company’s target capital structure. The study also explores how companies operating in different sectors of Pakistani market adjust towards the target capital structure levels. The study also recognizes that an unanticipated share price change also have an effect on the target capital structure. The results indicate that companies do have target leverage and that their adjustment speed varies from sector to sector of the Pakistani market. A typical sector closes more than 50% of the gap between its actual and its target debt ratios within one year.

scholarly journals PENGARUH LIBERALISASI ARUS MODAL TERHADAP PERTUMBUHAN EKONOMI ASEAN-5

2020 ◽  
Vol 3 (2) ◽  
pp. 345-354
Author(s):  
Devilia Sitorus ◽  
Crisanty Sutristyaningtyas Titik
Keyword(s):  
Economic Growth ◽  
Significant Influence ◽  
Capital Flows ◽  
The Philippines ◽  
Financial Openness ◽  
Partial Adjustment ◽  
Adjustment Model ◽  
Partial Adjustment Model ◽  
Short And Long Term

This study aims to examine the relationship between capital flow liberalization and economic growth in ASEAN-5. This research is a quantitative study that uses data: GDP, Gross Capital Formation, financial disclosure seen from the Chinn-Ito index for the period 2000-2017 in 5 ASEAN countries namely Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Data were processed using panel data regression analysis and specifically for Indonesia, Partial Adjustment Model (PAM) regression was performed. The results of this study indicate that financial openness seen from the Chinn-Ito index has a negative and significant influence on the economic growth of ASEAN-5 countries. Capital flows have a positive and significant impact on the economic growth of ASEAN-5 countries. Meanwhile, the PAM (Partial Adjustment Model) regression model shows that capital flows have a positive and significant influence on Indonesia's economic growth both in the short and long term, while financial openness has a negative and significant impact on Indonesia's economic growth both in the short and long term.

scholarly journals The Heterogeneity of Speed of Adjustment Capital Structure Across Industrial Sectors

2021 ◽  
Vol 10 (1) ◽  
pp. 103-114
Author(s):  
Bibit Robiatun ◽  
Rini Setyo Witiastuti
Keyword(s):  
Capital Structure ◽  
Consumer Goods ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Partial Adjustment ◽  
Speed Of Adjustment ◽  
Basic Industry ◽  
Industrial Sectors ◽  
Partial Adjustment Model ◽  
Firm Characteristic

This study aims to analyze heterogeneity of speed of adjustment on basic industry, consumer goods, and misceleeneous companies. The population in this study uses basic industry, consumer goods, and miscellenoeus companies listed on the Indonesia Stock Exchange in 2009-2018 period. The method of determining the sample using a pusposive sampling technique based on criteries determined by researchers. We employ two-step partial adjustment model and use measure of book leverage and firm characteristic; profitability, size, tangibility, and growth which has an influence leverage target to estimate speed of adjustment. For three industries, there is evidence of heterogeneity of speef adjustment. The result showed that speed of adjustment 24% of basic industry, 37.1% of consumer goods, and 27.3% of miscellaneous industry.

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