scholarly journals Optimal Capital Structure and Leverage Adjustment Speed of European Public and Private Firms

2020 ◽  
Vol 22 (2) ◽  
Author(s):  
Klemen Stegovec ◽  
Matjaž Črnigoj
Keyword(s):  
Capital Structure ◽  
Private Firms ◽  
Public And Private ◽  
Optimal Capital Structure ◽  
European Public ◽  
Adjustment Speed ◽  
Optimal Capital

On the adjustment speed of SMEs to their optimal capital structure

2011 ◽  
Vol 39 (4) ◽  
pp. 977-996 ◽  
Author(s):  
Cristina Aybar-Arias ◽  
Alejandro Casino-Martínez ◽  
José López-Gracia
Keyword(s):  
Capital Structure ◽  
Optimal Capital Structure ◽  
Adjustment Speed ◽  
Optimal Capital

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

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 Did They Do It Differently? Capital Structure Choices of Public and Private Sectors in Pakistan

2006 ◽  
Vol 45 (4II) ◽  
pp. 701-709 ◽  
Author(s):  
Muhammad Azeem Qureshi ◽  
Toseef Azid
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Financial Distress ◽  
Firm Value ◽  
Public And Private ◽  
Leverage Ratio ◽  
Factors Affecting ◽  
Optimal Capital Structure ◽  
Financial Decision ◽  
Optimal Capital

Capital structure is one of the most complex areas of strategic financial decision making due to its interrelationship with other financial decision variables. For more than four decades discussion in corporate finance concerns the question of optimal capital structure: Given a level of total capital necessary for supporting firm’s activities, is there a way of dividing this capital into debt and equity which maximises firm value? And, if so, what are the critical factors in setting the leverage ratio for a given firm? Corporate finance literature is overwhelmed by this hot debate, which is still going on, about firm value triggered by the two conflicting conclusions of Modigliani and Miller (1958, 1963). For a comprehensive review of this literature, see Harris and Raviv (1991). The theoretical and empirical research about the optimal capital structure has so far been inconclusive and conflicting. However, the capital structure approach to firm value has been successful to replace heuristics with more methodical approach to define capital structure of the firm. The researchers have theoretically as well as empirically identified many endogenous and exogenous factors affecting the firm’s leverage. They have theoretically and empirically identified agency costs, information asymmetry, taxes, non-debt tax shields, growth, firm size, assets’ collateral value and tangibility, profitability and liquidity, earnings variability, expected costs of financial distress, industry classification, country factor, and firm’s international activities as the determinants of firm’s debt-equity choices.

scholarly journals DETERMINANTS OF CAPITAL STRUCTURE’S ADJUSTMENT SPEED: EMPIRICAL ANALYSIS OF REAL ESTATE, PROPERTY, AND CONSTRUCTION FIRMS

2021 ◽  
Vol 22 (1) ◽  
pp. 51-64
Author(s):  
Subiakto Soekarno ◽  
Eggy Muhammad Prayoga ◽  
Indra Yudha Mambea
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Negative Impact ◽  
Positive Impact ◽  
Regression Result ◽  
Construction Firms ◽  
Optimal Capital Structure ◽  
Adjustment Speed ◽  
Estate Property ◽  
Optimal Capital

This study explored the determinants of capital structure, optimal capital structure, and adjustment speed in real-estate, property, and construction firms in Indonesia. It conducted a quantitative analysis of the annual report of 25 listed firms by employing a generalized method of moment approach with panel data to estimate the result. Results showed that the determinants of capital structure, such as profitability, tangibility, size, and liquidity, have a negative impact on leverage. By contrast, a non-debt tax shield has a positive impact. Based on the regression result, firms have an optimal capital structure target with a yearly adjustment speed of 80%. Furthermore, calculation of optimal target structure shows that firms require approximately three years to meet the discrepancy between their current capital structure and the targeted capital structure.

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