The Speed of Adjustment to the Target Market Value Leverage Is Slower Than You Think
| Autor: | Jay R. Ritter, Qie Ellie Yin |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
040101 forestry
Economics and Econometrics 050208 finance Offset (computer science) Capital structure 05 social sciences 04 agricultural and veterinary sciences Stock price Leverage (negotiation) Accounting 0502 economics and business Value (economics) Econometrics Economics 0401 agriculture forestry and fisheries Robustness (economics) Empirical evidence Finance Target market |
| Zdroj: | Journal of Financial and Quantitative Analysis. 55:1946-1977 |
| ISSN: | 1756-6916 0022-1090 |
| DOI: | 10.1017/s0022109019000516 |
| Popis: | In the capital structure literature, speed of adjustment (SOA) estimates are similar whether book or market leverage is used. This robustness is suspect, given the survey evidence that firms target their book leverage and the empirical evidence that they don’t issue securities to offset market leverage changes caused by stock price changes. We show that existing market SOA estimates are substantially upward biased due to the passive influence of stock price fluctuations. Controlling for this bias, the SOA estimate is 16% for book leverage and 10% for market leverage, implying that the trade-off theory is less important than previously thought. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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