Macroeconomic Conditions And Capital Structure Adjustment Speed PDF Download
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Author | : Douglas O. Cook |
Publisher | : |
Total Pages | : 56 |
Release | : 2008 |
Genre | : |
ISBN | : |
Download Macroeconomic Conditions and Capital Structure Adjustment Speed Book in PDF, ePub and Kindle
Studies show that capital structure choice varies over time and across firms and that macroeconomic conditions are important factors in analyzing firms' financing choices. However, studies have largely ignored the impact of macroeconomic conditions on the adjustment speed of capital structure toward targets. Hackbarth et al. (2006) develop a contingent model for analyzing the impact of macroeconomic conditions on dynamic capital structure choice. Allowing for dynamic capital structure adjustments, their model predicts that firms should adjust their capital structure faster in booms than in recessions. We employ U.S. data over a 30 year sample period to test the relationship between macroeconomic conditions and capital structure adjustment speed using both two-stage and integrated partial adjustment dynamic capital structure models. We find evidence supporting the prediction from Hackbarth et al's theoretical framework that firms adjust to target leverage faster in good states than in bad states, where states are defined by term spread, default spread, GDP growth rate, and market dividend yield. Our results also support the pecking order theory in that under-levered firms adjust faster than firms that are over-levered. We find evidence favoring the market timing theory implication that under-levered firms have less incentive to adjust toward target leverage when stock market performance is good, as measured by dividend yield on the market and price-output ratio. Robustness tests demonstrate that our speed of capital structure adjustment cannot be simply explained by firm size, the degree of deviation from target, or by the definition of debt ratio. Our results are also robust to potential boundary issues.
Author | : Sudha Krishna |
Publisher | : |
Total Pages | : 350 |
Release | : 2012 |
Genre | : Capital |
ISBN | : |
Download The Effect of Macroeconomic Conditions on the Capital Structure Adjustment Speed of South African Listed Firms Book in PDF, ePub and Kindle
Author | : Siwapol Achariyawong |
Publisher | : |
Total Pages | : 66 |
Release | : 2012 |
Genre | : |
ISBN | : |
Download Macroeconomic Condition and Capital Structure Adjustment Speed Book in PDF, ePub and Kindle
Author | : Sharjil M. Haque |
Publisher | : International Monetary Fund |
Total Pages | : 51 |
Release | : 2021-11-05 |
Genre | : Business & Economics |
ISBN | : 1589064127 |
Download The COVID-19 Impact on Corporate Leverage and Financial Fragility Book in PDF, ePub and Kindle
We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
Author | : Ronald W. Masulis |
Publisher | : |
Total Pages | : 168 |
Release | : 1988 |
Genre | : Business & Economics |
ISBN | : |
Download The Debt/equity Choice Book in PDF, ePub and Kindle
Author | : Wei Wang |
Publisher | : |
Total Pages | : 58 |
Release | : 2013 |
Genre | : |
ISBN | : |
Download Market Imperfections, Macroeconomic Conditions, and Capital Structure Adjustments Book in PDF, ePub and Kindle
This paper investigates how capital structure dynamics depend on “systematic” adjustment costs proxied by market imperfections and macroeconomic conditions in a cross-country setting. We document substantial variations in firms' capital structure adjustments across countries as well as over time. Consistent with adjustment costs impeding firms from rebalancing their capital structures, worse market imperfections are associated with slower speeds of adjustment (SOA) and larger leverage deviations. Intertemporally, capital structure adjustment is procyclical, with SOA increasing by 0.9 percentage point for every one-percentage-point increase in GDP growth. The procyclicality is attributable to good macroeconomic conditions mitigating market imperfections through channels of 1) facilitating free-ride restructuring, and 2) uncertainty alleviation. Our investigation features a bootstrapping-based estimation method that addresses the mechanical mean reversion of leverage ratio.
Author | : Wolfgang Drobetz |
Publisher | : |
Total Pages | : 38 |
Release | : 2007 |
Genre | : |
ISBN | : |
Download Firm Characteristics, Economic Conditions and Capital Structure Adjustments Book in PDF, ePub and Kindle
Author | : Christopher Parsons |
Publisher | : Now Publishers Inc |
Total Pages | : 107 |
Release | : 2009 |
Genre | : Business & Economics |
ISBN | : 160198202X |
Download Empirical Capital Structure Book in PDF, ePub and Kindle
Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
Author | : Moonsoo Kang |
Publisher | : |
Total Pages | : 53 |
Release | : 2018 |
Genre | : |
ISBN | : |
Download Market Imperfections, Macroeconomic Conditions, and Capital Structure Dynamics Book in PDF, ePub and Kindle
This article investigates how “systematic” adjustment costs proxied by market imperfections, and macroeconomic conditions affect capital structure dynamics in a cross-country setting. We document substantial variations in firms' capital structure adjustments across countries and, particularly, over time. Consistent with adjustment costs impeding firms from rebalancing their capital structures, worse market imperfections are associated with slower speeds of adjustment (SOA) and larger leverage deviations. Intertemporally, capital structure adjustment is procyclical, with SOA increasing by 0.9 percentage point for a one-percentage-point increase in GDP growth rate. The procyclicality is attributable to good macroeconomic conditions mitigating market imperfections through channels of 1) facilitating free-ride restructuring and 2) uncertainty alleviation. Our investigation features a bootstrapping-based estimation method that addresses the mechanical mean reversion of leverage ratio.
Author | : Xiaoxi Xu |
Publisher | : |
Total Pages | : 0 |
Release | : 2022 |
Genre | : |
ISBN | : |
Download Capital Structure and Macroeconomic Conditions Book in PDF, ePub and Kindle
This paper examines the impact of macroeconomic conditions on the capital structure adjustment speed. Using a sample of Canadian firms listed on the Toronto Stock Exchange between 1981 and 2020, I document that firms adjust their capital structure to the target more rapidly in good macroeconomic conditions than in bad macroeconomic conditions. Alternative estimation methods of macroeconomic conditions are considered, but the results stay the same. The results are also robust to different industry categories and different classifications of years into good and bad macroeconomic states.