Abstract
With a sample of listed companies from 2000 to 2010 and using Generalized method of moment (GMM), the paper researches the impacts of firms characteristics and macroeconomic factors on capital structure dynamic adjustment towards target leverage. Using integrated dynamic partial adjustment capital structure model, we find evidence that, relative to in bad macroeconomic states, firms adjust their leverage towards target faster in good states, and that large size firms adjust their leverage towards target faster than small size firms. So dose high growth firms. Our result also prove that, since small size firms are unable to adjust their leverage in time, especially in period of economic recession, they are more likely to face financial difficulties and capital chain ruptures.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Cook DO, Tang T (2008) Macroeconomic conditions and capital structure adjustment speed. SSRN Working Paper 1101664
Dongwei S, Haijian Z (2009) Macroeconomic condition and corporate capital structure: evidence from publicly-listed firms in China during 1994 to 2007. Econ Res (12):52−69 (Chinese)
Drobetz W, Pensa P, Wanzenried G (2007) Firm characteristics, economic conditions and capital structure adjustments. SSRN Working Paper 924179
Faulkender MW, Flannery MJ, Hankins KW, Smith JM (2007) Do adjustment costs impeding realization of target capital structure? AFA 2008 New Orleans Meetings Paper, Available at SSRN Working Paper 972148
Hovakimian A, Opler T, Titman S (2001) The debt-equity choice. J Finan Quant Anal 36(1):1–24
Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and the ownership structure. J Financ Econ 3(1):305–360
Korajczyk RA, Levy A (2003) Capital structure choice: macroeconomic conditions and financial constraints. J Financ Econ 68(1):75–109
Levy A, Hennessy C (2007) Why does capital stru cture choice vary with macroeconomic conditions? J Monetary Econ 54(6):1545–1564
Liang M, Yue S (2011) Dynamic adjustment of capital structure under macroeconomics impact—a differential analysis based on financial constrained. China Industry Economy (5):109–118 (Chinese)
Qu Y-H (2006) Capital structure adjustment speed of Chinese listed firms and effect factors of it—based on empirical analysis of unbalanced data. Account Res (6):56–62 (Chinese)
Rajan R, Zingales L (1995) What do we know about capital structure: some evidence from international data. J Finan 50(5):1421–1460
Suarez Javier, Sussman Oren (1997) Financial distress, bankruptcy law and the business cycle. J Finan 46(2):529–554
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Ling, Zx., Lin, Yw. (2013). Macroeconomic Condition, Firm’s Financial Characteristics and Capital Structure Dynamic Adjustment. In: Qi, E., Shen, J., Dou, R. (eds) The 19th International Conference on Industrial Engineering and Engineering Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-38442-4_12
Download citation
DOI: https://doi.org/10.1007/978-3-642-38442-4_12
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-38441-7
Online ISBN: 978-3-642-38442-4
eBook Packages: Business and EconomicsBusiness and Management (R0)