IDEAS home Printed from https://ideas.repec.org/a/ids/ijbglo/v19y2017i4p477-496.html
   My bibliography  Save this article

Shareholders' preferences on initial leverage in the determination of firm's leverage

Author

Listed:
  • Nurdin Nurdin

Abstract

The persistence of capital structure still puzzles. One of the arguments why persistence occurs is due to the adjustment to the optimal level of leverage of slow done or not done in full, due to the significant costs associated with such adjustments. However, some facts indicate that the process of adjustment to the optimal leverage level remains slow even though the company has a cheap way to make adjustments. This study proposes an alternative answer, i.e., the possibility of the existence of shareholders' preferences on initial leverage in the determination of the firm's leverage. This possibility was tested by developing a model of partial adjustment to the optimal level of leverage set at the beginning of the establishment of the company. This study concludes that the persistence of capital structure is partly due to the preferences of the shareholders on initial leverage in the determination of firm's leverage.

Suggested Citation

  • Nurdin Nurdin, 2017. "Shareholders' preferences on initial leverage in the determination of firm's leverage," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 19(4), pages 477-496.
    • Handle: RePEc:ids:ijbglo:v:19:y:2017:i:4:p:477-496
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=87296
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijbglo:v:19:y:2017:i:4:p:477-496. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=245 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.