606
Views
0
CrossRef citations to date
0
Altmetric
FINANCIAL ECONOMICS

The firms’ debt reversibility trend: An application to a large sample of industrial SMEs

, &
Article: 2172802 | Received 01 Oct 2022, Accepted 22 Jan 2023, Published online: 01 Feb 2023

References

  • Ahsan, T., Man, W., & Qureshi, M. A. (2016). Mean reverting financial leverage: Theory and evidence from Pakistan. Applied Economics, 48(5), 379–23. https://doi.org/10.1080/00036846.2015.1080802
  • Anwar, M., Hassan, A., & Hameed, F. (2019). Peer effect in firms’ financial decision making: Evidence from corporate capital structure. Journal of Managerial Sciences, 13(3), 33–47.
  • Aybar-Arias, C., Casino-Martinez, A., & Lopez-Gracia, J. (2012). On the adjustment speed of SMEs to their optimal capital structure. Small Business Economics, 39(4), 977–996. https://doi.org/10.1007/s11187-011-9327-6
  • Banerjee, A. V. (1992). A simple model of herd behavior. The Quarterly Journal of Economics, 107(3), 797–817. https://doi.org/10.2307/2118364
  • Bauer, P. (2004). Determinants of capital structure, empirical evidence from the Czech Republic. Czech Journal of Economics and Finance, 54(1), 2–21.
  • Bontempi, M. E., & Golinelli, R. 2001. “Is financial leverage mean-reverting? Unit root tests and corporate financing models”. Working Papers 422. Dipartimento Scienze Economiche, Universita’ di Bologna.
  • Booth, L., Aivazian, V., Demirguc-Kunt, A., & Maksimovic, V. (2001). Capital Structure in Developing Countries. The Journal of Finance, 56(1), 87–130. https://doi.org/10.1111/0022-1082.00320
  • Bradley, M., Jarrell, G. A., & Kim, E. H. (1984). On the existence of an optimal capital structure: Theory and evidence. The Journal of Finance, 39(3), 857–877. https://doi.org/10.2307/2327950
  • Brendea, G., & Pop, F. (2019). Herding behavior and financing decisions in Romania. Managerial Finance, 45(6), 716–725.https://doi.org/10.1108/MF-02-2018-0093
  • Byoun, S. (2008). How and When Firms Adjust Their Capital Structure toward Targets? The Journal of Finance, 63(6), 3069–3096. https://doi.org/10.1111/j.1540-6261.2008
  • Byoun, S., & Rhim, J. (2005). Tests of the pecking order theory and the trade-off theory of optimal capital structure. The Global Business and Finance Review, 10, 1–20.
  • Camara, O. (2017). Industry herd behaviour in financing decision making. Journal of Economics and Business, 94, 32–42. https://doi.org/10.1016/j.jeconbus.2017.08.001
  • Chang, X., & Dasgupta, S. (2009). Target behavior and financing: How conclusive is the evidence. The Journal of Finance, 64(4), 1767–1796. https://doi.org/10.1111/j.1540-6261.2009.01479.x
  • Chen, L., & Zhao, X. (2007). Mechanical mean reversion of leverage ratios. Economics Letters, 95(2), 223–229. https://doi.org/10.1016/j.econlet.2006.10.008
  • Damodaran, A. (2010). Applied corporate finance. In 3rd edition, John Wiley & Sons.
  • DeAngelo, H., & Masulis, R. (1980). Optimal capital structure under corporate and personal taxation. Journal of Financial Economics, 8(1), 3–29. https://doi.org/10.1016/0304-405X(80)90019-7
  • Devos, E., Rahman, S., & Tsang, D. (2017). Debt covenants and the speed of capital structure adjustment. Journal of Corporate Finance, 45, 1–18. https://doi.org/10.1016/j.jcorpfin.2017.04.008
  • D’Mello, R., & Farhat, J. (2008). A comparative analysis of proxies for an optimal leverage ratio. Review of Financial Economics, 17(3), 213–227. https://doi.org/10.1016/j.rfe.2007.06.001
  • Dovbischuk, I. (2022). Innovation-oriented dynamic capabilities of logistics service providers, dynamic resilience and firm performance during the COVID-19 pandemic. The International Journal of Logistics Management, 33(2), 499–519. https://doi.org/10.1108/IJLM-01-2021-0059
  • Drobetz, W., Pensa, P., & Wanzenried, G. 2006. “Firm characteristics and dynamic capital structure adjustment”. SSRN: https://ssrn.com/abstract=952268 or
  • Fama, E. F., & French, K. R. (1997). Industry costs of equity. Journal of Financial Economics, 43(2), 153–193. https://doi.org/10.1016/S0304-405X(96)00896-3
  • Fama, E. F., & French, K. R. (2002). Testing trade-off and pecking order predictions about dividends and debt. Review of Financial Studies, 15(1), 1–33. https://doi.org/10.1093/rfs/15.1.1
  • Faulkender, M., Flannery, M. J., Hankins, K. W., & Smith, J. M. (2012). Cash flows and leverage adjustments. Journal of Financial Economics, 103(3), 632–646. https://doi.org/10.1016/j.jfineco.2011.10.013
  • Filbeck, G., Gorman, R. F., & Preece, D. C. (1996). Behavioral aspects of the intra- industry capital structure decision. Journal of Financial and Strategic Decisions, 9(2), 55–67.
  • Fischer, E., Heinkel, R., & Zechner, J. (1989). Dynamic capital structure choice: Theory and tests. The Journal of Finance, 64(1), 19–40. https://doi.org/10.1111/j.1540-6261.1989.tb02402.x
  • Fitzgerald, F., & Ryan, J. (2019). The impact of firm characteristics on speed of adjustment to target leverage: A UK study. Applied Economics, 51(3), 315–327. https://doi.org/10.1080/00036846.2018.1495822
  • Flannery, J. M., & Rangan, K. P. (2006). “Partial adjustment toward target capital structures. Journal of Financial Economics, 79(3), 469–506. https://doi.org/10.1016/j.jfineco.2005.03.004
  • Frank, M., & Goyal, V. 2008. “Trade-off and pecking order theories of debt”. Research - Working Paper, Center for Corporate Governance, Tuck School of Business at Dartmouth. https://doi.org/10.2139/ssrn.670543.
  • Graham, G. R. (2006). A review of taxes and corporate finance. Foundations and Trends in Finance, 1(7), 573–691. https://doi.org/10.1561/0500000010
  • Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2–3), 187–243. https://doi.org/10.1016/S0304-405X(01)00044-7
  • Gujarati, D., & Porter, D. 2010. “Essentials of econometrics”. 4th edition McGraw – Hill International.
  • Gungoraydinoglu, A., & Öztekin, O. (2021). Financial leverage and debt maturity targeting: International evidence. Journal of Risk and Financial Management, 14(9), 1–36. https://doi.org/10.3390/jrfm14090437
  • Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. The Journal of Financial and Quantitative Analysis, 36(1), 1–24. https://doi.org/10.2307/2676195
  • Huang, R., & Ritter, J. (2009). Testing theories of capital structure and estimating the speed of adjustment. The Journal of Financial and Quantitative Analysis, 44(2), 237–271. https://doi.org/10.1017/S0022109009090152
  • Hull, R. (1999). Leverage ratios, industry norms, and stock Price reaction: An empirical investigation of stock-for-debt transactions. The Journal of the Financial Management Association, 28(2), 32–45.
  • Iliev, P., & Welch, I. 2010. “Reconciling estimates of the speed of adjustment of leverage ratios”. Researche - Working Paper. Department of Economics, Pennsylvania State University, Brown University.
  • Jalilvand, A., & Harris, R. S. (1984). Corporate behavior in adjusting to capital structure and dividend targets: An econometric study. The Journal of Finance, 39, 127–145. https://doi.org/10.1111/j.1540-6261.1984.tb03864.x.1
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323–329.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
  • Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision making under risk. Econometrica, 47(2), 263–291. https://doi.org/10.2307/1914185
  • Kang, Y. J., & Jang, W. W. (2016). Mechanical mean reversion of leverage ratios: analysis of south Korean firms. The Journal of Eurasian Studies, 13(3), 103–125. https://doi.org/10.31203/aepa.2016.13.3.005
  • Kester, C. W. (1986). Capital and ownership structure: A comparison of United States and Japanese manufacturing corporations. Financial Management, 15(1), 5–16. https://doi.org/10.2307/3665273
  • Leary, M. T., & Roberts, M. R. (2014). Do peer firms affect corporate financial policy? The Journal of Finance, 69(1), 139–178. https://doi.org/10.1111/jofi.12094
  • Lemmon, M. L., Roberts, M. R., & Zender, J. F. (2008). Back to the beginning: Persistence and the cross-section of corporate capital structure. The Journal of Finance, 63(4), 1575–1608. https://doi.org/10.1111/j.1540-6261.2008.01369
  • Lemmon, M., & Zender, J. (2010). Debt capacity and tests of capital structure theories. The Journal of Financial and Quantitative Analysis, 45(5), 1161–1187. https://doi.org/10.1017/S0022109010000499
  • Lin, F.-L. (2020). “Do DJIA firms reflect stationary debt ratios? Economies, 8(4), 76. https://doi.org/10.3390/economies8040076
  • Lisboa, I. (2017). Capital structure of exporter SMEs during the financial crisis: Evidence from Portugal. The European Journal of Management Studies, 22(1), 25–49.
  • MacKay, P., & Phillips, G. M. (2005). How does industry affect firm financial structure? Review of Financial Studies, 18(4), 1433–1466. https://doi.org/10.1093/rfs/hhi032
  • Memon, P. A., Md-Rusb, R., & Ghazalib, Z. B. (2021). Adjustment speed towards target capital structure and its determinants. Economic Research-Ekonomska Istraživanja, 34(1), 1966–1984. https://doi.org/10.1080/1331677X.2020.1860792
  • Miller, M. H. (1977). Debt and Taxes. The Journal of Finance, 32(2), 261–275. https://doi.org/10.2307/2326758
  • Morais, F., Serrasqueiro, Z., & Ramalho, J. (2021). The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? Business Research Quarterly, 1(23), 1–23. https://doi.org/10.1177/23409444211024653
  • Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance, 39(3), 575–592. https://doi.org/10.2307/2327916
  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0
  • Nishihara, M., Sarkar, S., & Zhang, C. (2019). Agency cost of debt overhang with optimal investment timing and size. Journal of Business Finance & Accounting, 46(5–6), 784–809. https://doi.org/10.1111/jbfa.12379
  • Nunes, P. M., & Serrasqueiro, Z. (2017). Short-term debt and long-term debt determinants in small and medium-sized hospitality firms. Tourism Economics, 23(3), 543–560. https://doi.org/10.5367/te.2015.0529
  • Ozkan, A. (2001). Determinants of capital structure and adjustment to long run target: Evidence from UK company panel data. Journal of Business Finance & Accounting, 28(1&2), 175–198. https://doi.org/10.1111/1468-5957.00370
  • Pacheco, L. (2016). Capital structure and internationalization: The case of Portuguese industrial SMEs. Research in International Business and Finance, 38, 531–545. https://doi.org/10.1016/j.ribaf.2016.07.014
  • Pacheco, L., & Tavares, F. (2017). Capital structure determinants of hospitality sector SMEs. Tourism Economics, 23(1), 113–132. https://doi.org/10.5367/te.2015.0501
  • Proença, P., Laureano, R. M. S., & Laureano, L. M. S. (2014). Determinants of capital structure and the 2008 financial crisis: Evidence from Portuguese SMEs. Procedia - Social and Behavioral Sciences, 150, 182–191. https://doi.org/10.1016/j.sbspro.2014.09.027
  • Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50(5), 1421–1460. https://doi.org/10.3386/w4875
  • Rihab, B. A., & Lotfi, B. J. (2016). Managerial overconfidence and debt decisions. Journal of Modern Accounting and Auditing, 12(4), 225–241. https://doi.org/10.17265/1548-6583/2016.04.004
  • Rubio, G., & Sogorb, F. (2011). The adjustment to target leverage of Spanish public firms: Macroeconomic conditions and distance from target. Revista de Economía Aplicada, 19(57), 1–29.
  • Saona, P., Vallelado, E., & Martín, P. (2020). Debt, or not debt, that is the question: A Shakespearean question to a corporate decision. Journal of Business Research, 115, 378–392. https://doi.org/10.1016/j.jbusres.2019.09.061
  • Sardo, F., Serrasqueiro, Z., & Félix, E. G. S. (2020). Does Venture Capital affect capital structure rebalancing? The case of small knowledge-intensive service firms. Structural Change and Economic Dynamics, 53, 170–179. https://doi.org/10.1016/j.strueco.2020.02.003
  • Sardo, F., Vieira, S. E., & Serrasqueiro, Z. (2021). The role of gender and succession on the debt adjustments of family firm capital structure. Eurasian Business Review, 12(2), 349–372. https://doi.org/10.1007/s40821-021-00186-w
  • Sen, M., & Oruc, E. (2009). Behavioral dimension of cross-sectional capital structure decisions: ISE (Istanbul Stock Exchange) application. International Research Journal of Financial and Economics, 28(1), 33–41.
  • Serrasqueiro, Z., & Caetano, A. (2015). Trade-off theory versus Pecking order theory: Capital structure decisions in a peripheral region of Portugal. Journal of Business Economics and Management, 16(2), 445–466. https://doi.org/10.3846/16111699.2012.744344
  • Shafeeq Nimr Al-Maliki, H., Salehi, M., & Kardan, B. (2022). “The effect of COVID 19. on risk-taking of small and medium-sized, family and non-family firms”. Journal of Facilities Management 1. ahead-of-print https://doi.org/10.1108/JFM-09-2021-0105
  • Shyam-Sunder, L., & Myers, S. C. (1999). Testing static trade-off against pecking order models of capital structure. Journal of Financial Economics, 51(2), 219–244. https://doi.org/10.1016/S0304-405X(98)00051-8
  • Strebulaev, I. (2007). Do tests of capital structure theory mean what they say? The Journal of Finance, 62(4), 1747–1787. https://doi.org/10.1111/j.1540-6261.2007.01256.x
  • Vergas, N., Cerqueira, A., & Brandão, E. 2015. “The determinants of the capital structure of listed on stock market non-financial firms: Evidence for Portugal”. Working paper 0870-8541, FEP-UP, School of Economics and Management, University of Porto.
  • Wanzenried, G. (2006). Capital Structure Dynamics in the UK and Continental Europe. The European Journal of Finance, 12(8), 693–716. https://doi.org/10.1080/13518470500460178
  • Welch, I. (2004). Capital structure and stock returns. Journal of Political Economy, 112(1), 106–131. https://doi.org/10.1086/379933
  • Xu, Z. 2007. “Do firms adjust toward a target leverage level?”. Working Paper/Document de travail 2007-50. Bank of Canada, 1-44.
  • Zeckhauser, R., Patel, J., & Hendricks, D. (1991). Nonrational actors and financial market behavior. Theory and Decision, 31(2), 257–287. https://doi.org/10.1007/BF00132995