Dynamic Capital Structure Adjustment Speed, Adjustment Capacity and Financing Choice

• Main Authors: Hsien-ping Lin, 林憲平
• Other Authors: 王元章
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/06487169266713305315

博士 === 國立中正大學 === 財務金融研究所 === 103 === I.The Determinants of Dynamic Capital Structure Adjustment Speed This paper applies both views of market discipline hypothesis and agency problem hypothesis to explore the determinants of dynamic capital structure adjustment speed. As to market discipline hypothesis testing, the evidences show that firms with higher profitability, more growth opportunities, stronger uniqueness or better rating usually have a faster speed. In addition, industrial adjustment speed usually dominates firm’s speed. However, the proportion of tangible assets and the deviation between observed and target leverage are negatively related to firm’s adjustment speed. Although firm size and dividend policy have impacts on the speed, the direction is uncertain. With regard to agency problem hypothesis testing, the results show that larger board size is usually associated with a slower speed, but greater board independence with better corporate governance may positively correlate with the speed. Moreover, the results show no compelling evidences that inside directors or CEO-chairman may impact the speed. With the exception of a higher inside ownership, a higher board ownership, block ownership, institutional ownership or foreign ownership usually induces a slower speed. II.Capital Structure Adjustment-Capacity and Financing Choice This study examines the endogenous relationships between capital structure adjustment-capacity and financing choice. Using a simultaneously equation model and a new adjustment-capacity econometric technique, we find that financing choice could trigger a better adjustment-capacity. Choice decision also could be driven by adjustment-capacity when firms borrow from public. Consistent with previous literatures, large or under-levered firms prefer to issue debt rather than issue equity as financing instrument; in contrast, equity financing might be a better option for small or over-levered firms. The result shows that firms with higher financing capacity usually have more flexibility to face business conditions.