Patterns of Capital Structure Adjustment by Listing Type: Evidence from European Firms

Аннотация

This study analyzed the questions of whether capital structure adjustment in European firms differed by listing type and by current debt ratio. Major issues are concerned with (1) the adjustment speed toward target debt ratio and (2) the length of the adjustment period required toward the ratios. Results showed that (1) the speed of adjustment of firms with lower debt ratios were faster; (2) the adjustment speeds of listed firms were faster than those of delisted and unlisted firms; and (3) the length of the half-life adjustment time toward target ratio was shorter for listed firms than for delisted and unlisted firms. This paper contributed to the development of capital structure issues in that the adjustment speed could be different depending on firms’ current debt ratios and listing types, unlike previous results in the literature.