IDEAS home Printed from https://ideas.repec.org/a/lif/jrgelg/v4y2015p225-241.html
   My bibliography  Save this article

Target Capital Structure Determinants and Speed of Adjustment Analysis to Address the Keynes-Hayek Debate

Author

Listed:
  • André Getzmann
  • Sebastian Lang
  • Klaus Spremann

    (University of St. Gallen, School of Finance, Bodanstrasse 6, 9000 St. Gallen and Swiss Institute of Banking and Finance, Rosenbergstrasse 52, 9000 St. Gallen, Switzerland)

Abstract

According to F. A. Hayek, Keynes’ General Theory neglects an analysis of the production structure. As a contribution to this research gap, we look at companies’ decisions to finance investments and at their agility to adjust their capital structure. We thus study the relationship between capital structure to finance corporate production and shifts in aggregate demand. Target capital structure determinants and speeds of adjustment to these target capital structures will be analyzed for a geographically comprehensive sample of 2,706 companies listed in Asia, Europe and the U.S.A. in the period 1995 – 2009. Aggregate demand turns out to be the coordinating force which determines managers’ choices of target capital structures. The speed of adjustments towards target capital structures indicate that firms are agile in adapting to their targets. Our results provide evidence on Keynes’ General Theory from a firm level perspective: Firms respond quickly to shifts in aggregate demand by adjusting capital and production structure correspondingly

Suggested Citation

  • André Getzmann & Sebastian Lang & Klaus Spremann, 2015. "Target Capital Structure Determinants and Speed of Adjustment Analysis to Address the Keynes-Hayek Debate," Journal of Reviews on Global Economics, Lifescience Global, vol. 4, pages 225-241.
    • Handle: RePEc:lif:jrgelg:v:4:y:2015:p:225-241
    as

    Download full text from publisher

    File URL: http://www.lifescienceglobal.com/independent-journals/journal-of-reviews-on-global-economics/volume-4/85-abstract/jrge/1891-abstract-target-capital-structure-determinants-and-speed-of-adjustment-analysis-to-address-the-keynes-hayek-debate
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Keynes; Hayek; capital structure; dynamic adjustment; panel models;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    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:lif:jrgelg:v:4:y:2015:p:225-241. 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: Faisal Ameer Khan (email available below). General contact details of provider: http://www.lifescienceglobal.com .

    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.