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Asymmetric peer effects in capital structure dynamics

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  • Im, Hyun Joong

Abstract

Using a semiparametric smooth-coefficient partial adjustment model, this study finds evidence for asymmetric peer effects on capital structure adjustment speeds between overlevered and underlevered firms. Overlevered firms’ adjustment speeds and peer firm shocks have a U-shaped relationship, while underlevered firms’ adjustment speeds monotonically increase with peer firm shocks.

Suggested Citation

  • Im, Hyun Joong, 2019. "Asymmetric peer effects in capital structure dynamics," Economics Letters, Elsevier, vol. 176(C), pages 17-22.
    • Handle: RePEc:eee:ecolet:v:176:y:2019:i:c:p:17-22
    DOI: 10.1016/j.econlet.2018.12.019
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    Cited by:

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    2. Mate, Mariluz & Occhino, Paolo, 2020. "A proposal to estimate the valuation of small and medium size companies using geographically comparable information," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 4(1), pages 34-51, January.
    3. Jiali Liu & Xinran Xie & Yu Duan & Liang Tang, 2023. "Peer effects and the mechanisms in corporate capital structure: evidence from Chinese listed firms," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 295-326, March.
    4. Ali-Rind, Asad & Boubaker, Sabri & Jarjir, Souad Lajili, 2023. "Peer effects in financial economics: A literature survey," Research in International Business and Finance, Elsevier, vol. 64(C).
    5. Im, Hyun Joong & Faff, Robert & Ha, Chang Yong, 2022. "Uncertainty, investment spikes, and corporate leverage adjustments," Journal of Banking & Finance, Elsevier, vol. 145(C).
    6. Mubashir Hayat Khan & Shamsul Aizam Zulkifli & Nedim Tutkun & Alessandro Burgio, 2024. "Adaptive Virtual Impedance Control with MPC’s Cost Function for DG Inverters in a Microgrid with Mismatched Feeder Impedances for Future Energy Communities," Sustainability, MDPI, vol. 16(2), pages 1-23, January.
    7. Zhang, Haolin & Feng, Yongqi & Wang, Ying & Ni, Juan, 2024. "Peer effects in corporate financialization: The role of Fintech in financial decision making," International Review of Financial Analysis, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Peer effects; Capital structure; Speed of adjustment; Leverage dynamics;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing

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