THE INFERENCE OF ECONOMIC CONDITIONS ON OPTIMAL DYNAMIC CAPITAL STRUCTURE

• Main Authors: Sheve-hwa Huang, 黃雪華
• Other Authors: Ruey-shii Chen
• Format: Others
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/35414654884501363930

碩士 === 大同大學 === 事業經營學系(所) === 97 === This paper analyzes the optimal leverage and the factors that influence optimal leverage of the companies listed on Taiwan Stock Exchange and OTC in Taiwan with a dynamic capital structural model by incorporating economic conditions factors so as to examine the impacts of these factors on the speed of adjusting a corporate optimal capital structure. The empirical finding shows that a booming economy is beneficial to the adjusting speed of a corporate optimal capital structure. Meanwhile, there is a significantly positive correlation between leverage ratios and firm size. However, the correlation with profitability is negative. In a recession, companies pay more focus on fundamentals and take a gradual approach in adjusting their capital structure by taking into accounts costs and other factors. When the influence of individual variables on leverage is greater than that of an economic boom, there is a significantly positive correlation between leverage ratios, firm size and collateralized asset value. However, there is a significantly negative correlation with non-debt tax shield, growth opportunity, profitability and equity structure.