Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence

Malaysian firms which are examined based on a dynamic framework appear to practice target capital structure and take into account certain firm characteristics in their capital structure decisions. These firms readjust instantaneously when they are off the target indicating low adjustment cost wh...

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Main Author:	Haron, Razali
Format:	Article
Language:	English
Published:	2014 Inderscience Enterprises Ltd. , UK 2014
Subjects:	HG4001 Financial management. Business finance. Corporation finance.
Online Access:	http://irep.iium.edu.my/32530/ http://irep.iium.edu.my/32530/ http://irep.iium.edu.my/32530/4/JGBA_7%25282%2529_Paper_5_live.pdf

id	iium-32530
recordtype	eprints
spelling	iium-325302014-11-17T03:07:28Z http://irep.iium.edu.my/32530/ Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence Haron, Razali HG4001 Financial management. Business finance. Corporation finance. Malaysian firms which are examined based on a dynamic framework appear to practice target capital structure and take into account certain firm characteristics in their capital structure decisions. These firms readjust instantaneously when they are off the target indicating low adjustment cost while the pecking order hypothesis seems to influence the financing decisions. Found to be over-levered most firms behave rationally by cutting down the amount of debt in their capital structure to reach the target. In terms of the proximity to the target, under-levered firms are found to be much closer to target than over-levered firms. This study contributes to the literature by identifying the rational financing behaviour and the proximity of Malaysian firms to target leverage. This indication of firms’ proximity to target can help managers to outline and set the next steps to be taken in order to reach the target capital structure to maximise firm value. 2014 Inderscience Enterprises Ltd. , UK 2014 Article PeerReviewed application/pdf en http://irep.iium.edu.my/32530/4/JGBA_7%25282%2529_Paper_5_live.pdf Haron, Razali (2014) Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence. Journal for Global Business Advancement, 7 (2). pp. 151-162. ISSN 1746-9678 (O, 1746-966X (P) http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=jgba
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG4001 Financial management. Business finance. Corporation finance.
spellingShingle	HG4001 Financial management. Business finance. Corporation finance. Haron, Razali Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
description	Malaysian firms which are examined based on a dynamic framework appear to practice target capital structure and take into account certain firm characteristics in their capital structure decisions. These firms readjust instantaneously when they are off the target indicating low adjustment cost while the pecking order hypothesis seems to influence the financing decisions. Found to be over-levered most firms behave rationally by cutting down the amount of debt in their capital structure to reach the target. In terms of the proximity to the target, under-levered firms are found to be much closer to target than over-levered firms. This study contributes to the literature by identifying the rational financing behaviour and the proximity of Malaysian firms to target leverage. This indication of firms’ proximity to target can help managers to outline and set the next steps to be taken in order to reach the target capital structure to maximise firm value.
format	Article
author	Haron, Razali
author_facet	Haron, Razali
author_sort	Haron, Razali
title	Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
title_short	Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
title_full	Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
title_fullStr	Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
title_full_unstemmed	Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence
title_sort	firms’ speed of adjustment and rational financing behaviour: malaysian evidence
publisher	2014 Inderscience Enterprises Ltd. , UK
publishDate	2014
url	http://irep.iium.edu.my/32530/ http://irep.iium.edu.my/32530/ http://irep.iium.edu.my/32530/4/JGBA_7%25282%2529_Paper_5_live.pdf
first_indexed	2023-09-18T20:46:55Z
last_indexed	2023-09-18T20:46:55Z
_version_	1777409737083584512

Firms’ speed of adjustment and rational financing behaviour: Malaysian evidence

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