In this paper, we develop a model of dynamic capital structure choice based on a sample of Korean manufacturing firms and estimate the unobservable optimal capital structure using a wide range of observable determinants. Uunbalanced panel data of Korean listed firms for the period 1985 to 2002 is used. In addition to identifying and estimating the effects of the determinants of capital structur...

We derive here a fundamental model for the capital structure of depository institutions. The derivation centres on the basic Modigliani-Miller methodology, but instead of using a constant EBIT, as classically done for corporate firms, it implements a variable one, which hinges on the interest earnings from the asset-based loans made to the borrower. Following this, the effect of risk and credit...

This paper investigates the relationship of capital structure and corporate performance of firm before and during crisis (2007). This study focuses on construction companies which are listed in Main Board of Bursa Malaysia from 2005 to 2008. All the 49 construction companies are divided into big, medium and small sizes, based on the paid-up capital. The result shows that there is relationship b...

This paper incorporates the cost of adjustment between observed and optimal leverage in explaining the variation in firm’s equity or bank-debt financing investments. Using a dynamic adjustment approach identifies the determinants to capital structure between different financial systems. In relation to firm sales U.K and U.S firms have 50-100 percent more equity financing than Swedish firms depe...

Matt Spiegel for their comments and suggestions. Abstract This paper develops a model of optimal capital structure with stochastic interest rate which is assumed to follow a mean-reverting process. Closed-form solutions are obtained for both the value of the firm and the value of its risky debt. The paper finds that the current level and the long-run mean of the interest rate process play disti...