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Thai Firms' Histories And Their Capital Structure

Author

Listed:
  • TAK YAN LAW

    (Department of Economics, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong)

  • TERENCE TAI-LEUNG CHONG

    (Department of Economics, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong)

Abstract

This paper examines the impacts of profitability, stock price performance and growth opportunity on the capital structure of firms in Thailand. The methodology of Kayhan and Titman (2007) is applied to model the dynamics of debt ratios. The results suggest that the leverage ratios of Thai firms do adjust towards their target levels. The deviations from the target due to the pecking-order and market timing effects are found to be significant. In contrast to Kayhan and Titman (2007), our results show that the market timing behavior does not persist.

Suggested Citation

  • Tak Yan Law & Terence Tai-Leung Chong, 2011. "Thai Firms' Histories And Their Capital Structure," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(01), pages 1-14.
    • Handle: RePEc:wsi:afexxx:v:06:y:2011:i:01:n:s2010495211500047
    DOI: 10.1142/S2010495211500047
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    Keywords

    Capital structure; pecking-order theory; market timing theory; trade-off theory; G3;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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