The Dynamic Adjustment of Firms' Capital Structure in China
12 Pages Posted: 24 Aug 2005
Date Written: August 2004
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: Suggested Citation