Abstract
AbstractWe find that firms with more capable managers exhibit a slower adjustment speed of capital structure toward the target level. This result is stronger for younger and smaller firms. These can be explained by capable managers’ avoidance of transaction costs and their decision to focus on core activities rather than on capital structure adjustment. Lastly, the negative relation between firm value and the deviation from target capital structure is weaker for firms with competent managers, implying that the stock market does not discount the value of firms deviating from the target capital structure if they are managed by competent managers.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
