Munich Personal RePEc Archive

Capital Structure Adjustments and Asymmetric Information

Ripamonti, Alexandre (2019): Capital Structure Adjustments and Asymmetric Information. Published in: International Journal of Economics and Finance , Vol. 12, No. 11 (5 November 2019): pp. 1-14.


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The findings of this paper suggest another reason for capital structure adjustments besides the Trade-Off and Pecking Order theories propositions because asymmetric information impacts capital structure changes and deviations o nly for a quarter whilst stationarity impacts them for 4 quarters, even when controlled. Asymmetric information has been measured by Corwin-Schultz bid ask spread estimator and capital structure target as the mean of debt to equity ratio of 262 Nyse non-financial and non-regulated companies and their industries during 91 quarters. The data were analyzed with Johansen-Fisher panel cointegration. The capital structure deviations last from 2 to 4 quarters and move toward a target.

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