The STUDIA UNIVERSITATIS BABEŞ-BOLYAI issue article summary

The summary of the selected article appears at the bottom of the page. In order to get back to the contents of the issue this article belongs to you have to access the link from the title. In order to see all the articles of the archive which have as author/co-author one of the authors mentioned below, you have to access the link from the author's name.

 
       
         
    STUDIA OECONOMICA - Issue no. 2 / 2004  
         
  Article:   THE DYNAMICS OF CAPITAL STRUCTURE.

Authors:  VIOREL DORIN LĂCĂTUŞ.
 
       
         
  Abstract:  The common approach in empirical capital structure research aimed at studying the determinants of optimal leverage by analyzing the association between observed leverage and a set of explanatory variables. This approach has two major shortcomings. First, the observed leverage need not necessarily be the optimal leverage. Second, the empirical analyses, having essentialy non-dinamic character , are unable to shed any light on the way firms should adjust the dinamic of their capital structure .This paper presents a dynamic adjustment model, and uses and panel data methodology applied to in order to specifically establish the determinants of a time-varying optimal capital structure. In addition, the model acknowledges that at any point in time firms� observed leverage may not be optimal, and firms differ in their speed of adjustment towards the optimal capital structure, which itself may be changing over time within the same firm. We also attempt to identify factors determining the speed of adjustment. We argue that firms generally develop capital structures do not fit the target , and that they adjust very slowly to it.  
         
     
         
         
      Back to previous page