Heterogeneity in the Speed of Capital Structure Adjustment across Countries and over the Business Cycle

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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Heterogeneity in the Speed of Capital Structure Adjustment across Countries and over the Business Cycle. / Drobetz, Wolfgang; Schilling, Dirk C.; Schröder, Henning.
in: European Financial Management, Jahrgang 21, Nr. 5, 01.11.2015, S. 936-973.

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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@article{c43ce50716dd4c939a0a06ba81d92fcb,
title = "Heterogeneity in the Speed of Capital Structure Adjustment across Countries and over the Business Cycle",
abstract = "This study analyses the heterogeneity in the speed of capital structure adjustment. Using a doubly-censored Tobit estimator that accounts for mechanical mean reversion in leverage ratios, the speed of adjustment is 25% per year in a large international sample, supporting the economic relevance of the trade-off theory. Differences in the adjustment speed across financial systems are attributable to differences in the costs of adjustment. Macroeconomic and micro-level supply-side constraints also affect the dynamics of leverage. Firms adjust more slowly during recessions, and the business cycle effect on adjustment speed is most pronounced for financially constrained firms in market-based countries.",
keywords = "Business cycle, Capital structure, Dynamic panel methods, Institutional arrangements, Speed of adjustment, Management studies",
author = "Wolfgang Drobetz and Schilling, {Dirk C.} and Henning Schr{\"o}der",
note = "Publisher Copyright: {\textcopyright} 2015 John Wiley & Sons Ltd.",
year = "2015",
month = nov,
day = "1",
doi = "10.1111/eufm.12048",
language = "English",
volume = "21",
pages = "936--973",
journal = "European Financial Management",
issn = "1354-7798",
publisher = "John Wiley & Sons Ltd.",
number = "5",

}

RIS

TY - JOUR

T1 - Heterogeneity in the Speed of Capital Structure Adjustment across Countries and over the Business Cycle

AU - Drobetz, Wolfgang

AU - Schilling, Dirk C.

AU - Schröder, Henning

N1 - Publisher Copyright: © 2015 John Wiley & Sons Ltd.

PY - 2015/11/1

Y1 - 2015/11/1

N2 - This study analyses the heterogeneity in the speed of capital structure adjustment. Using a doubly-censored Tobit estimator that accounts for mechanical mean reversion in leverage ratios, the speed of adjustment is 25% per year in a large international sample, supporting the economic relevance of the trade-off theory. Differences in the adjustment speed across financial systems are attributable to differences in the costs of adjustment. Macroeconomic and micro-level supply-side constraints also affect the dynamics of leverage. Firms adjust more slowly during recessions, and the business cycle effect on adjustment speed is most pronounced for financially constrained firms in market-based countries.

AB - This study analyses the heterogeneity in the speed of capital structure adjustment. Using a doubly-censored Tobit estimator that accounts for mechanical mean reversion in leverage ratios, the speed of adjustment is 25% per year in a large international sample, supporting the economic relevance of the trade-off theory. Differences in the adjustment speed across financial systems are attributable to differences in the costs of adjustment. Macroeconomic and micro-level supply-side constraints also affect the dynamics of leverage. Firms adjust more slowly during recessions, and the business cycle effect on adjustment speed is most pronounced for financially constrained firms in market-based countries.

KW - Business cycle

KW - Capital structure

KW - Dynamic panel methods

KW - Institutional arrangements

KW - Speed of adjustment

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=84904518691&partnerID=8YFLogxK

U2 - 10.1111/eufm.12048

DO - 10.1111/eufm.12048

M3 - Journal articles

AN - SCOPUS:84904518691

VL - 21

SP - 936

EP - 973

JO - European Financial Management

JF - European Financial Management

SN - 1354-7798

IS - 5

ER -

DOI