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)Researchpeer-review

1 Scopus Citations

Abstract

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
Volume57
Issue number4
DOIs
Publication statusPublished - 1 Dec 2012

Fingerprint

Capital structure
Taiwan
Hong Kong
Singapore
Financing
Debt
Deviation
Stock price performance
Equity
Profitability
Leverage ratio
Growth opportunities
Chinese economy
Stock prices
Debt ratio
Market timing

Keywords

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

Cite this

CHONG, Tai Leung, Terence ; LAW, Tak Yan, Daniel ; ZOU, LIN. / Long-term adjustment of capital structure : evidence from Singapore, Hong Kong and Taiwan. In: Singapore Economic Review. 2012 ; Vol. 57, No. 4.
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Long-term adjustment of capital structure : evidence from Singapore, Hong Kong and Taiwan. / CHONG, Tai Leung, Terence; LAW, Tak Yan, Daniel; ZOU, LIN.

In: Singapore Economic Review, Vol. 57, No. 4, 01.12.2012.

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

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