IDEAS home Printed from
   My bibliography  Save this paper

How Often Do Firms Rebalance Their Capital Structures? Evidence from Corporate Filings


  • Kortwewg, Arthur

    (University of Southern California)

  • Schwert, Michael

    (Ohio State University)

  • Strebulaev, Ilya A.

    (Stanford University)


This paper shows that the frequency of capital structure adjustment varies significantly across firms. The most active 25% of firms account for 51% of leverage adjustments, while the least active 50% of firms account for only 19% of such events. Using new hand-collected data from detailed corporate filings, we find that frequently rebalancing firms tend to use lines of credit to fund operating losses and working capital needs. In contrast, infrequently rebalancing firms use long-term debt and equity to fund investment and rebalance capital structure. These findings underscore the importance of adjustment costs in financing decisions and show that the reasons for rebalancing are much broader than those covered by contemporary capital structure theories. Our results demonstrate the advantage of complementing accounting data with rich textual data from corporate filings.

Suggested Citation

  • Kortwewg, Arthur & Schwert, Michael & Strebulaev, Ilya A., 2018. "How Often Do Firms Rebalance Their Capital Structures? Evidence from Corporate Filings," Research Papers 3699, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:3699

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ban, Mingyuan & Chen, Chang-Chih, 2019. "Ambiguity and capital structure adjustments," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 242-270.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    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:ecl:stabus:3699. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.