search query: @author Zechner, J. / total: 16
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| Author: | Fischer, E. O. Heinkel, R. Zechner, J. |
| Title: | Dynamic capital structure choice : theory and tests. |
| Journal: | Journal of Finance
1989 : MAR, VOL. 44:1, p. 19-40 |
| Index terms: | CAPITAL STRUCTURE OF COMPANIES FINANCIAL MODELS FINANCIAL THEORY DYNAMIC MODELS |
| Language: | eng |
| Abstract: | A model of dynamic capital structure choice in the presence of recapitalization costs is developed. The theory provides the optimal dynamic recapitalization policy as a function of firm-specific characteristics. It is found that even small recapitalization costs lead to wide swings in a firm's debt ratio over time. Rather than static leverage measures, debt ratio range of a firm is used as an empirical measure of capital structure relevance. The results of empirical tests relating firm's debt ratio ranges to firm-specific features strongly support the theoretical model of relevant capital structure choice in a dynamic setting. |
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