Dynamics Of Capital Structure: The Case Of Korean Listed Manufacturing Companies

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Dr.. Hye-Sung Kim, Assistant Professor (Creator)
Appalachian State University (ASU )
Web Site: https://library.appstate.edu/

Abstract: 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. Unbalanced panel data of Korean listed firms for the period 1985–2002 is used. In addition to identifying and estimating the effects of the determinants of capital structure, we take into consideration some Korea-specific features, such as the structural break before and after the financial crisis and firms’ affiliation to chaebol business groups. Our results indicate that the optimal capital structure has been affected by the financial crisis. Although the results suggest that chaebol-affiliated firms have higher optimal level of leverage and adjust their capital structure faster than non-chaebol firms, firms’ leverage might be associated with factors other than chaebol-affiliation, such as size, profitability and growth opportunity.

Additional Information

Hyesung Kim, Heshmati A, Aoun D. Dynamics of Capital Structure: The Case of Korean Listed Manufacturing Companies. Asian Economic Journal. 2006;20(3):275-302. Publisher version of record available at: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-8381.2006.00236.x
Language: English
Date: 2006
capital structure, debt, firm, panel data

Email this document to