The Dynamic Adjustment of Firms' Capital Structure in China

12 Pages Posted: 24 Aug 2005

Date Written: August 2004

Abstract

By using a dynamic adjustment model, this paper examines the dynamic adjustment for capital structure of public firms in China. The results show that, the capital structure of Chinese public firms is adjusted dynamically. The public firms in China are systemically under-leveraged with high adjustment costs. The main reason can be attributed to the imperfect capital market. Therefore, some efforts, such as completing the laws and accelerating the development of capital market, should be made to improve the optimization of public firms' capital structure.

Keywords: 资Capital structure, dynamic adjustment, adjustment cost, optimal ratio

JEL Classification: G32, G33

Suggested Citation

Lian, Yujun, The Dynamic Adjustment of Firms' Capital Structure in China (August 2004). Available at SSRN: https://ssrn.com/abstract=784444 or http://dx.doi.org/10.2139/ssrn.784444

Yujun Lian (Contact Author)

Sun Yat-sen University ( email )

135 Xin Gang Xi Road
Guangzhou, Guangdong Province
China
86-20-84110648 (Phone)

HOME PAGE: http://www.lingnan.net/intranet/teachinfo/dispuser.asp?name=lianyj

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