State ownership and adjustment speed toward target leverage: Evidence from a transitional economy

Abstract

Using a quantile regression approach and 5,374 Vietnamese firm-year observations from 2000 to 2016, this paper examines the effect of state ownership on the speed of adjustment SOA toward target leverage across various levels of capital structure. The findings consistently show that these effects on SOA vary depending on the leverage level. The relationship is negative for low-leveraged firms, positive for high-leveraged firms, but insignificant in the central area of leverage distribution. Moreover, the negative effects are greater than the positive effects.