Capital Structure Choice and the Costs of Adjustment to Target: New Evidence from Jordanian Panel Data

Posted: 20 Oct 2008

See all articles by Basil Al‐Najjar

Basil Al‐Najjar

University of London - School of Business, Economics and Informatics

Date Written: September 1, 2005

Abstract

Unlike previous empirical studies of capital structure, which are mainly restricted to the United States and other developed countries, this paper investigates capital structure decisions in developing countries through studying Jordanian non-financial firms. The paper finds that the capital structure choice in developing countries is influenced by factors namely, institutional ownership, profitability, business risk, asset tangibility, asset liquidity, market-to-book, and firm size. The findings are similar to these relating to developed countries. In addition, there is evidence that Jordanian firms have a target capital structure and that they adjust relatively quickly to their target leverage ratios. This indicates that the disequilibrium costs and the adjustment costs are equally important.

Keywords: Capital structure, target, determinants, panel data, partial adjustment model

Suggested Citation

Al-Najjar, Basil, Capital Structure Choice and the Costs of Adjustment to Target: New Evidence from Jordanian Panel Data (September 1, 2005). Available at SSRN: https://ssrn.com/abstract=1285738

Basil Al-Najjar (Contact Author)

University of London - School of Business, Economics and Informatics ( email )

Malet Street
Bloomsbury
London, WC1E 7HX
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
436
PlumX Metrics