Long-term adjustment of capital structure : evidence from Singapore, Hong Kong and Taiwan

Tai Leung, Terence CHONG, Tak Yan, Daniel LAW, Lin ZOU

Research output: Journal PublicationsJournal Article (refereed)peer-review

1 Citation (Scopus)


This paper examines the impact of profitability, stock price performance and growth opportunity on the capital structure of firms in Singapore, Taiwan and Hong Kong. In contrast to Kayhan and Titman (2007), it is found that firms in these three Chinese-dominated economies strongly prefer debt to equity or internal fund financing. They also take advantage of stock price appreciation by issuing more shares. An adjustment model for debt ratios is estimated. The results suggest that the leverage ratios of these firms slowly adjust toward their target levels. Deviations from the target due to the pecking order and market timing effects are found to be significant.
Original languageEnglish
JournalSingapore Economic Review
Issue number4
Publication statusPublished - 1 Dec 2012


  • Capital structure
  • financial deficit
  • market timing
  • pecking order

Cite this