Asymmetric Effect of Deviation from Target Debt and Financial Turnover on Adjustment Speed of Optimal Capital Structure

Determining optimal capital structure is deemed a pivotal issue in corporate financing and enjoys a crucial role in making a decision about financing current activities and investment plans in firms. The main purpose of this article is to study the asymmetric effect of deviation from target debt and turnover on the adjustment speed of optimal capital structure in the firms admitted to the Tehran Stock Exchange. Therefore, the data pertaining to ۱۱۵ firms were analysed through the use of the Generalised Method of Moments (GMM) within ۲۰۱۰-۲۰۲۰. The findings of the study have revealed that as the speed difference in these two modes is statistically significant, one could claim that, consistent with the Trade-off Theory, the deviation from target leverage turns out to be among the main factors that are affecting the leverage adjustment speed. Meanwhile, the conclusions assert that the leverage adjustment speed stands out to be significantly higher in the firms that are suffering from a cash holdings deficit than other ones. Moreover, investigating the interactional impacts of both the “deviation from target leverage” and the “turnover disequilibrium” variables on the capital adjustment speed indicates that the adjustment speed in the firms, in which the leverage is higher than the target and they have an excess of cash holdings, is annually ۸۸ percent, while the adjustment speed is not significant in the firms in which the leverage is lower than the target and they undergo a deficit in cash holdings. Yet, the adjustment speed in the firms suffering from a deficit in cash holdings, in which the leverage is higher than the target, is annually ۵۹ percent. According to the findings, an excess in cash holdings leads more to an accelerated speed of adjustment than a cash holdings deficit, whether the leverage is higher or lower than the target in the firm.

کلیدواژه ها:

Deviation from Target Debt ، Financial Turnover ، Capital Optimal Structure