UNOBSERVABLE EFFECTS AND SPEED OF ADJUSTMENT TO TARGET CAPITAL STRUCTURE

descriptionPublicationkeyboard_double_arrow_right Article 30 Nov 2017 Malaysia Publisher:UNIMAS PublisherJournal:International Journal of Business and Society, volume 16 (issn: 1511-6670,

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Authors: Matemilola, Bolaji Tunde; Amin Noordin, Bany Ariffin; Wan Ngah, Wan Azman Saini; Md Nassir, Annuar;

doi: 10.33736/ijbs.580.2015

UNOBSERVABLE EFFECTS AND SPEED OF ADJUSTMENT TO TARGET CAPITAL STRUCTURE

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Abstract

The paper investigates whether unobservable firm-specific effects such as managerial ability is a major component of the target capital structure. We apply the system generalized method of moments that accounts for unobservable firm-specific effects. Our results reveal that unobservable firm-specific effects such as managerial ability are a major component that explains most of the cross-sectional variation in firms’ capital structure in Malaysia.Keywords: Capital Structure; Unobservable Effects; System GMM; Malaysia.

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Malaysia

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Universiti Putra Malaysia
Malaysia

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