publication . Article . 2015

Empirical Evidence of Target Leverage, Adjustment Costs and Adjustment Speed of Non-Financial Firms in Selected African Countries

Oyebola Fatima Etudaiye-Muhtar; Ahmad, R.;
Open Access
  • Published: 01 Jun 2015 Journal: International Journal of Economics and Financial Issues, volume 5, issue 2, pages 482-488
Abstract
The issue of target leverage for corporate firms in developing countries has received little attention in extant literature, especially countries in Africa. Given the imperfection that exists in African financial markets that may limit firms access to external capital, this study investigates dynamic adjustment towards a target debt ratio. In addition, the study used a dynamic panel data estimation technique to determine adjustment costs and speed of adjustment in non-financial firms in selected African countries over the period 2003 to 2012. The study finds that the firms make dynamic adjustment to a target leverage with low adjustment costs and relatively fast...
Subjects
free text keywords: Capital Structure, Target Leverage, Adjustment Costs, jel:G32, capital structure, target leverage, adjustment costs, Business, HF5001-6182, Economics as a science, HB71-74
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