Heterogeneity of capital structure adjustment speed across Industry sector: Evidence from non-financial firms in Malaysia.
This study investigates the speed of adjustment (SOA) to target leverage for different industry sectors in Malaysia. Using the two-step system generalized method of moments for 415 non-financial firms from 2010 to 2021, we found that the SOA for the overall sample is 38.6% and 22.0% for total debt a...
| Published in: | INDONESIAN CAPITAL MARKET REVIEW |
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| Main Authors: | , , , , , , |
| Format: | Article |
| Language: | English |
| Published: |
UNIV INDONESIA
2024
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| Subjects: | |
| Online Access: | https://www-webofscience-com.uitm.idm.oclc.org/wos/woscc/full-record/WOS:001284587200001 |
| Summary: | This study investigates the speed of adjustment (SOA) to target leverage for different industry sectors in Malaysia. Using the two-step system generalized method of moments for 415 non-financial firms from 2010 to 2021, we found that the SOA for the overall sample is 38.6% and 22.0% for total debt and long-term debt, respectively. Our paper reveals the heterogeneity of SOA based on industry sectors. The industrial sector has the slowest adjustment speed (14.1%), whereas the healthcare industry has the quickest adjustment speed (80.4%) to target leverage. Our results are consistent with the dynamic capital structure theory regarding the deviation between target and actual leverage. Furthermore, our study demonstrates the significance of an industry-based perspective when researching SOA, which suggests that the capital structure strategy depends on the industry's business climate. |
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| ISSN: | 1979-8997 2356-3818 |
| DOI: | 10.21002/icmr.v16i1.1192 |