Indian Journal of Science and Technology
DOI: 10.17485/ijst/2016/v9i42/97812
Year: 2016, Volume: 9, Issue: 42, Pages: 1-6
Original Article
Hafezali Iqbal Hussain1*, Mohd Farid Shamsudin1 and Noor H. Jabarullah2
1Universiti Kuala Lumpur Business School, Malaysia; [email protected] 2ICOLE –Univerisiti Kuala Lumpur – British Malaysia Institute, Malaysia
*Author for correspondence
Hafezali Iqbal Hussain
Universiti Kuala Lumpur Business School, Malaysia; [email protected]
Objectives: This paper estimates firms’ speed of adjustment by measuring the difference between simulated debt levels (target) and actual leverage (observed) levels to the difference between real leverage levels and lag levels based on the unit of observation (firm level) data. We test the impact of endogenous and exogenous factors to speed of adjustment. We find that the interaction of types of factors is statistically significant which would invite a rethink on the current understanding of capital structure decisions.
Keywords: Capital Structure, Speed of Adjustment, System GMM, UK Firms
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