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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.
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