An earlier version of this paper was presented at the FMA Asian Conference, Queenstown, New Zealand, 2011, and we wish to thank the participants at this event for their helpful comments. We are also indebted to Steven Cahan (the editor) and two anonymous referees for their valuable suggestions.
The influence of firm financial position and industry characteristics on capital structure adjustment
Article first published online: 7 MAY 2014
© 2014 AFAANZ
Accounting & Finance
How to Cite
Smith, D. J., Chen, J., Anderson, H. D. (2014), The influence of firm financial position and industry characteristics on capital structure adjustment. Accounting & Finance. doi: 10.1111/acfi.12083
- Article first published online: 7 MAY 2014
- Manuscript Accepted: 25 MAR 2014
- Manuscript Received: 21 AUG 2012
- Capital structure;
- Speed of adjustment
We extend Byoun's (2008) modelling of the relationship between deficits and surpluses and adjustment speed, to demonstrate how industry characteristics identified by Kayo and Kimura (2011), including industry concentration, industry munificence and industry dynamism, impact on speed of adjustment. Using New Zealand firms as a case study, we find significant evidence that, as well as firm financial position, industry characteristics also impact on adjustment speed. The firm financial position results are the most robust, and we recommend further research to confirm the nature of the relationship between industry characteristics and the speed at which firms adjust towards target capital structures.