In search of conclusive evidence: How to test for adjustment to target capital structure

Journal of Corporate Finance

Volumn 17, Issue 1, 2011, Pages 33-44

  Hovakimian, Armen ^a   Li, Guangzhong ^b  

^a CITY UNIVERSITY OF NEW YORK   (United States)

^b CENTRAL UNIVERSITY OF FINANCE AND ECONOMICS   (China)

Author keywords

Adjustment to target; Capital structure; Target leverage

Indexed keywords

EID: 78649946793     PISSN: 09291199     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jcorpfin.2010.07.004     Document Type: Article

References (26)

1. Antoniou A., Guney Y., Paudyal K. The determinants of capital structure: capital market oriented versus bank oriented institutions. J. Financ. Quant. Anal. 2008, 43:59-92.
2. Bayless M., Chaplinsky S. Expectations of security type and the information content of debt and equity offers. J. Financ. Intermed. 1991, 1:195-214.
3. Blundell R., Bond S. Initial conditions and moment restrictions in dynamic panel data models. J. Econometrics 1998, 87:115-143.
4. Bradley M., Jarrell G., Kim E.H. On the existence of an optimal capital structure: theory and evidence. J. Finance 1984, 39:857-878.
5. Chang X., Dasgupta S. Target behavior and financing: how conclusive is the evidence?. J. Finance 2009, 64:1767-1796.
6. Fama E.F., French K.R. Testing tradeoff and pecking order predictions about dividends and debt. Rev. Financ. Stud. 2002, 15:1-33.
7. Fama E.F., MacBeth J.D. Risk and return: some empirical tests. J. Polit. Econ. 1973, 81:607-636.
8. Faulkender M., Flannery M.J., Hankins K.W., Smith J.M. Are Adjustment Costs Impeding Realization of Target Capital Structure? Working Paper 2007.
9. Fischer E.O., Heinkel R., Zechner J. Dynamic capital structure choice: theory and tests. J. Finance 1989, 44:19-40.
10. Flannery M., Rangan K. Partial adjustment toward target capital structure. J. Financ. Econ. 2006, 79:469-506.
11. Goldstein R., Ju N., Leland H. An EBIT-based model of dynamic capital structure. J. Bus. 2001, 74:483-512.
12. Graham J.R. Proxies for the corporate marginal tax rate. J. Financ. Econ. 1996, 42:187-221.
13. Hahn J., Hausman J., Kuersteiner G. Long difference instrumental variables estimation for dynamic panel models with fixed effects. J. Econometrics 2007, 140:574-617.
14. Hovakimian A., Opler T., Titman S. The debt-equity choice. J. Financ. Quant. Anal. 2001, 36:1-24.
15. Huang R., Ritter J.R. Testing theories of capital structure and estimating the speed of adjustment. J. Financ. Quant. Anal. 2009, 44:237-271.
16. Jalilvand A., Harris R. Corporate behavior in adjusting to capital structure and dividend targets: an econometric study. J. Finance 1984, 39:127-144.
17. Kayhan A., Titman S. Firms' histories and their capital structures. J. Financ. Econ. 2007, 83:1-32.
18. Lemmon M.L., Roberts M.R., Zender J.F. Back to the beginning: persistence and the cross-section of corporate capital structure. J. Finance 2008, 63:1575-1608.
19. Mackie-Mason J.K. Do taxes affect corporate financing decisions?. J. Finance 1990, 45:1471-1493.
20. Marsh P. The choice between equity and debt: an empirical study. J. Finance 1982, 37:121-144.
21. Petersen M.A. Estimating standard errors in finance panel data sets: comparing approaches. Rev. Financ. Stud. 2009, 22:435-480.
22. Rajan R.G., Zingales L. What do we know about capital structure? Some evidence from international data. J. Finance 1995, 50:1421-1460.
23. Shyam-Sunder L., Myers S.C. Testing static tradeoff against pecking order models of capital structure. J. Financ. Econ. 1999, 51:219-244.
24. Strebulaev I. Do tests of capital structure theory mean what they say?. J. Finance 2007, 62:1747-1787.
25. Titman S., Wessels R. The determinants of capital structure. J. Finance 1988, 43:1-19.
26. Wooldridge J.M. Econometric Analysis of Cross Section and Panel Data 2002, MIT Press, Cambridge, Massachusetts.