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:: Volume 5, Issue 18 (quarterly journal of Fiscal and Economic Policies 2017) ::
3 2017, 5(18): 77-102 Back to browse issues page
Capital Structure Adjustment: Generalized Methods of Moments
Seyed Abbas Hashemi Mr, Davoud Keshavarz Mehr Mr , Mojtaba Shahriyari Mr
MSc. University of Isfahan
Abstract:   (1263 Views)
Considering that the capital structure adjustment is costly, firms only adjust their capital structure when the benefits of adjustment exceed its costs. On the other hand, it can be argued that firms faced the different adjustment costs due to their specific characteristics, so they move toward their target leverage with different speeds. Hence, this paper reviews several features that affect the capital structure adjustment speed such as size, tangible assets, profitability, and deviations from target leverage. By considering the objectives of this study, a sample consists of 115 firms, which listed in Tehran Stock Exchange are selected for the periods of 2003-2016. To estimate adjustment speed, we use partial adjustment model and Generalized Method of Moments (GMM) as an estimation method. The results show that small firms and firms with low profitability and high deviations from the target leverage move much more rapidly toward their target leverage.
 
Keywords: Capital Structure, Target Leverage, Speed of Adjustment, Dynamic Trade-off Theory, Partial Adjustment Model.
Full-Text [PDF 860 kb]   (649 Downloads)    
Type of Study: Research | Subject: Special
Received: 2015/02/20 | Accepted: 2017/08/24 | Published: 2017/09/25
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Hashemi S A, Keshavarz Mehr D, Shahriyari M. Capital Structure Adjustment: Generalized Methods of Moments. 3. 2017; 5 (18) :77-102
URL: http://qjfep.ir/article-1-240-en.html


Volume 5, Issue 18 (quarterly journal of Fiscal and Economic Policies 2017) Back to browse issues page
فصلنامه سیاستهای مالی و اقتصادی Quarterly Journal of Fiscal and Economic Policies
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