Title: Partial adjustment approach to the study of firm capital structure
Abstract: In this paper, a new dynamic approach to the investigation of firm capital structure is developed. The basis for this model is the assumption that firms move toward their optimal debt ratios at a given rate. An empirical investigation of Australian firms' capital structures is carried out using both this 'partial adjustment' approach and the more traditional cross-sectional static approach. While the results of both models are consistent with each other, and the notion that various modern theories are significant in explaining firm debt ratio choice, the partial adjustment model appears to provide a better explanation of inter-industry debt ratio differences.
Publication Year: 1989
Publication Date: 1989-01-01
Language: en
Type: dissertation
Indexed In: ['crossref']
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