Abstract
Using a semiparametric smooth-coefficient partial adjustment model, this study finds evidence for asymmetric peer effects on capital structure adjustment speeds between overlevered and underlevered firms. Overlevered firms’ adjustment speeds and peer firm shocks have a U-shaped relationship, while underlevered firms’ adjustment speeds monotonically increase with peer firm shocks.
Original language | English |
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Pages (from-to) | 17-22 |
Number of pages | 6 |
Journal | Economics Letters |
Volume | 176 |
DOIs | |
State | Published - Mar 2019 |
Keywords
- Capital structure
- Leverage dynamics
- Peer effects
- Speed of adjustment