Title: The heterogeneity in adjustment speeds toward corporate target leverage: the case of Vietnam

Authors: An Thai; Radu Burlacu

Addresses: Faculty of Finance, University of Economics, The University of Danang, Danang 550000, Vietnam ' Recherches Appliquées à la Gestion (CERAG), Grenoble 38058 Cedex 9, France

Abstract: The paper explores the heterogeneity in the adjustment speed toward the optimal capital structure of Vietnamese listed firms on the period from 2005 to 2017. We test the existence of the target leverage and estimate the speed of adjustment by using a partial adjustment model. The study finds that under-leveraged firms move to the target leverage faster than those that are over-leveraged. The speed of off-target firms is higher than that of near-target firms, and firms with financial surplus move more quickly to the optimal level of debt than those with a deficit.

Keywords: heterogeneity; adjustment speed; target leverage; capital structure; partial adjustment model; deficit; Vietnam.

DOI: 10.1504/IJMEF.2021.114026

International Journal of Monetary Economics and Finance, 2021 Vol.14 No.2, pp.105 - 130

Received: 20 Sep 2019
Accepted: 03 Jun 2020
Published online: 06 Apr 2021 *

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