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Evolution of Capital Structure in East Asia: Corporate Inertia or Endeavours?

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  • Driffield, Nigel

    ()
    (Aston University)

  • Pal, Sarmistha

    ()
    (University of Surrey)

Abstract

The present paper examines the capital structure adjustment dynamics of listed non-financial corporations in seven East Asian countries during 1994-2002. Compared to firms in the least affected countries, average leverages were much higher among firms in the worst affected countries while the average speeds of adjustment were lower. This general ranking is robust to various alternative specifications and sample selections. We argue that this pattern is closely linked to weaknesses in regulatory environment and lack of access to alternative sources of finance in the worst affected countries.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3426.

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Length: 53 pages
Date of creation: Apr 2008
Date of revision:
Publication status: published in: Journal of the Royal Statistical Society, Series A (Statistics in Society), 2010, 173 (1), 1- 29
Handle: RePEc:iza:izadps:dp3426

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Related research

Keywords: generalised methods of moments; capital structure dynamics; partial adjustment models; inertia and endeavours; firm- and time-varying speed;

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References

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Cited by:
  1. Kuznecovs, Mihails & Pal, Sarmistha, 2012. "Does Corporate Governance Reform Necessarily Boost Firm Performance? Recent Evidence from Russia," IZA Discussion Papers 6519, Institute for the Study of Labor (IZA).
  2. Coricelli, Fabrizio & Driffield, Nigel & Pal, Sarmistha & Roland, Isabelle, 2009. "Excess Leverage and Productivity Growth in Emerging Economies: Is There A Threshold Effect?," CEPR Discussion Papers 7617, C.E.P.R. Discussion Papers.
  3. Coricelli, Fabrizio & Driffield, Nigel & Pal, Sarmistha & Roland, Isabelle, 2012. "When does leverage hurt productivity growth? A firm-level analysis," Journal of International Money and Finance, Elsevier, vol. 31(6), pages 1674-1694.

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