Leverage Adjustment Speed: Evidence in Indonesia

DOI

10.2991/aebmr.k.220304.034How to use a DOI?

Keywords

dynamic capital structure; target leverage; speed of adjustment

Abstract

Using data from Indonesia Stock Exchange (IDX) during 2010 – 2019, this study investigates the speed of adjustment on the corporate leverage in reaching the optimal target leverage of the non-financial listed firms in Indonesia. This study cites the Generalized Moment Method (GMM) panel model to estimate the speed of adjustment value by. We found that firms in Indonesia are proven to adjust their capital structures to reach their optimal leverage ratios. Both use book leverage and market leverage, in observing all sectors and in split sectoral observations. This research has implications to contributes to the existing literature of the capital structure, and also to help company managers in their decision making, related to the factors affecting the speed of adjustment of firms’ optimal target leverage ratios.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Salmadhia Putri Adiba
PY  - 2022
DA  - 2022/03/08
TI  - Leverage Adjustment Speed: Evidence in Indonesia
BT  - Proceedings of the 7th Sriwijaya Economics, Accounting, and Business Conference (SEABC 2021)
PB  - Atlantis Press
SP  - 258
EP  - 265
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220304.034
DO  - 10.2991/aebmr.k.220304.034
ID  - Adiba2022
ER  -