Capital structure adjustment in Latin American firms: An empirical test based on the Error Correction Model
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| Natura: | Artículo científico |
| Lingua: | en |
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Universidad ICESI
2023
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| _version_ | 1876443053126844416 |
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| author | Jorge A. Muñoz Mendoza |
| author_facet | Jorge A. Muñoz Mendoza |
| contents | Capital structure adjustment in Latin American firms: An empirical test based on the Error Correction Model Jorge A. Muñoz Mendoza Carlos L. Delgado Fuentealba Carmen L. Veloso Ramos Sandra M. Sepúlveda Yelpo Edinson E. Cornejo Saavedra Diego A. Erices Olivera Administración y Contabilidad off trade ajuste leverage adjustment The objective of this article is to analyze the capital structure adjustment of Latin American firms through the pecking order and trade-off theories using a sample of 975 non-financial firms for the period 2000-2017. The results support the existence of a target capital structure. Adjustment speeds ranged between 48.9% and 74.3% and generate a rapid convergence of leverage towards its target level. Financial deficits explained less than half of the changes in debt, which contradicts the pecking order theory. The results of the error correction model indicated that companies dynamically deviate from their long-term capital structure. The convergence speeds in the partial adjustment model increased up to 69.5% and 91.7% with the error correction method. These results are relevant for firms and investors.JEL classification: G31; G32; G34. 2023 artículo científico 0123-5923 https://www.redalyc.org/articulo.oa?id=21282720005 https://www.redalyc.org/journal/212/21282720005/ https://www.redalyc.org/journal/212/21282720005/html/ https://www.redalyc.org/journal/212/21282720005/21282720005.epub https://www.redalyc.org/journal/212/21282720005/movil 10.18046/j.estger.2023.166.5432 en http://www.redalyc.org/revista.oa?id=212 Estudios Gerenciales application/pdf Universidad ICESI Estudios Gerenciales (Colombia) Num.166 Vol.39 |
| format | Artículo científico |
| id | redalyc_21282720005 |
| institution | Redalyc |
| language | en |
| publishDate | 2023 |
| publisher | Universidad ICESI |
| spellingShingle | Capital structure adjustment in Latin American firms: An empirical test based on the Error Correction Model Jorge A. Muñoz Mendoza Administración y Contabilidad off trade ajuste leverage adjustment Capital structure adjustment in Latin American firms: An empirical test based on the Error Correction Model Jorge A. Muñoz Mendoza Carlos L. Delgado Fuentealba Carmen L. Veloso Ramos Sandra M. Sepúlveda Yelpo Edinson E. Cornejo Saavedra Diego A. Erices Olivera Administración y Contabilidad off trade ajuste leverage adjustment The objective of this article is to analyze the capital structure adjustment of Latin American firms through the pecking order and trade-off theories using a sample of 975 non-financial firms for the period 2000-2017. The results support the existence of a target capital structure. Adjustment speeds ranged between 48.9% and 74.3% and generate a rapid convergence of leverage towards its target level. Financial deficits explained less than half of the changes in debt, which contradicts the pecking order theory. The results of the error correction model indicated that companies dynamically deviate from their long-term capital structure. The convergence speeds in the partial adjustment model increased up to 69.5% and 91.7% with the error correction method. These results are relevant for firms and investors.JEL classification: G31; G32; G34. 2023 artículo científico 0123-5923 https://www.redalyc.org/articulo.oa?id=21282720005 https://www.redalyc.org/journal/212/21282720005/ https://www.redalyc.org/journal/212/21282720005/html/ https://www.redalyc.org/journal/212/21282720005/21282720005.epub https://www.redalyc.org/journal/212/21282720005/movil 10.18046/j.estger.2023.166.5432 en http://www.redalyc.org/revista.oa?id=212 Estudios Gerenciales application/pdf Universidad ICESI Estudios Gerenciales (Colombia) Num.166 Vol.39 |
| title | Capital structure adjustment in Latin American firms: An empirical test based on the Error Correction Model |
| topic | Administración y Contabilidad off trade ajuste leverage adjustment |
| url | https://www.redalyc.org/articulo.oa?id=21282720005 https://www.redalyc.org/journal/212/21282720005/ https://www.redalyc.org/journal/212/21282720005/html/ https://www.redalyc.org/journal/212/21282720005/21282720005.epub https://www.redalyc.org/journal/212/21282720005/movil |