Dynamic adjustment towards target capital structure: Thailand evidence

Razali Haron, Khairunisah Ibrahim, Fauzias Mat Nor, Izani Ibrahim

    Research output: Contribution to journalArticle

    3 Citations (Scopus)

    Abstract

    By employing panel data, the present study examines the dynamic aspects of capital structure of 269 non-financial listed firms in Thailand from 2000 to 2009. This is a relatively new area in finance literature. The present study investigates the existence of target capital structure, speed of adjustment and factors affecting the speed of adjustment. The analyses are conducted using the dynamic Partial Adjustment Model (PAM) and estimated based on the Generalized Method of Moments. The results indicate the existence of target capital structure and firms undergone adjustment processes to be at their target capital structure from time to time with a considerably rapid speed of adjustment, consistent with the dynamic trade-off theory. Firms in Thailand are found to be under-adjusting, being below the required adjustment to be at the target within a year. Strong evidence exists that indicates that firm specific factors significantly influence speed of adjustment for firms in Thailand, such as distance from target, size of firm and profitability.

    Original languageEnglish
    JournalJurnal Pengurusan
    Volume39
    Publication statusPublished - 2013

    Fingerprint

    Thailand
    Capital structure
    Dynamic adjustment
    Speed of adjustment
    Generalized method of moments
    Factors
    Firm-specific factors
    Finance
    Trade-off theory
    Adjustment process
    Profitability
    Partial adjustment model
    Panel data

    Keywords

    • Capital structure
    • Generalized Method of Moments
    • Partial Adjustment Model
    • Speed of adjustment
    • Thailand

    ASJC Scopus subject areas

    • Business, Management and Accounting (miscellaneous)
    • Accounting
    • Business and International Management

    Cite this

    Haron, R., Ibrahim, K., Nor, F. M., & Ibrahim, I. (2013). Dynamic adjustment towards target capital structure: Thailand evidence. Jurnal Pengurusan, 39.

    Dynamic adjustment towards target capital structure : Thailand evidence. / Haron, Razali; Ibrahim, Khairunisah; Nor, Fauzias Mat; Ibrahim, Izani.

    In: Jurnal Pengurusan, Vol. 39, 2013.

    Research output: Contribution to journalArticle

    Haron, R, Ibrahim, K, Nor, FM & Ibrahim, I 2013, 'Dynamic adjustment towards target capital structure: Thailand evidence', Jurnal Pengurusan, vol. 39.
    Haron, Razali ; Ibrahim, Khairunisah ; Nor, Fauzias Mat ; Ibrahim, Izani. / Dynamic adjustment towards target capital structure : Thailand evidence. In: Jurnal Pengurusan. 2013 ; Vol. 39.
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