Capital Structure Adjustments and Asymmetric Information

Ripamonti, Alexandre

doi:10.5539/ijef.v11n12p1

Cited by 3 publications

(3 citation statements)

References 79 publications

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“…In the same line, the signaling theory (Ross, 1977) illustrates that managers with an informational advantage have an incentive to signal their private information through their choice of debt level. Ripamonti (2019) suggests the existence of asymmetric information costs influence American companies to adjust their leverage. The same result is found by Ji et al (2019), who show that firm-level asymmetric information is important determinant of the level leverage of US companies.…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Does board gender diversity affect capital structure decisions?

Saad

Belkacem

2021

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Purpose The purpose of this paper is to investigate the indirect relationship between board gender diversity and capital structure decisions and to examine whether the capital structure is affected by the type of approach used to promote women’s participation in the boardroom. Design/methodology/approach Based on a sample of French non-financial listed companies over the period 2006–2019, this paper uses structural equations modeling, difference-in-differences using propensity score matching and chow test to highlight these effects. Findings This paper finds that the relationship between the board gender diversity and the capital structure is mediated through the information transparency channel and firm risk taking channel. Furthermore, the results show that the effect of board gender diversity on capital structure decisions varies through the approach adopted (voluntary, enabling or coercive). Originality/value This paper contributes to the literature in several ways. First, the study is to the knowledge the first to examine whether and how board gender diversity affects capital structure decisions through two mediations channels, namely, the information transparency and the firm risk taking. Second, the study is one of the first to examine whether the capital structure is affected by the type of approach used to promote women’s participation in the boardroom: coercive, enabling or voluntary approach.

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Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Does board gender diversity affect capital structure decisions?

Saad

Belkacem

2021

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“…The authors suggested future research, with portfolio selection according to information asymmetry and asset liquidity balancing. Ripamonti (2019) states that asymmetric information can anticipate the capital structure adjustments. Funaoka and Nishimura (2019) found domestic institutional investors have better information than foreign ones, owing to the fact that institutional investment sentiment and IPO first day returns are positively associated.…”

Section: Stock Pricesmentioning

confidence: 99%

Asymmetric information and daily stock prices in Brazil

Ichimura

Videira²,

Ripamonti

2020

estud.gerenc.

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This paper has the goal of analyzing the association between asymmetric information, measured by Corwin-Schultz bid ask spread estimator, and stock prices in the Brazilian stock market. Daily data from 64 corporations over a period of 10 years were examined using the Johansen-Fisher panel cointegration technique in order to assess the validity of asymmetric information measurements in shorter periods than in previous studies. The results indicate that asymmetric information anticipates stock prices over a period of up to two days in a theoretically consistent way. Future research may control the results via traditional finance variables.

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“…Existing related literature has tended to focus mainly on developed countries’ panel sets (Hackbarth et al., 2006 for the case of the United States; for the case of Korea; for a sample of European countries and Ripamonti, 2019 for the US case) while also ignoring the dynamic nature of the risk‐capital structure adjustment nexus. To the best of the authors’ knowledge, few studies, namely Callaghy (1988), Stein and Nissanke (1999), and Chipeta and Deressa (2016), have explored the impact of idiosyncratic and macroeconomic risk on capital structure adjustments in the African markets and even then, they, in addition, to include a limited number of observations, ignored the potential dynamism in the hypothesized link.…”

Section: Introductionmentioning

confidence: 99%

Impact of risk on capital structure adjustments: Evidence from the African markets

Amelot

Agathee

Seetanah

2023

J Corp Accounting Finance

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Employing panel data analysis, the study investigated the impact of risk on speed and costs of adjustments on target leverage on listed firms from the African markets—a panel data set of 2790 observations for 12 years spanning from 2008 to 2019. Based on the results of the Unit root test and Granger causality test, there are bidirectional relationships between risk and capital structure and vice versa. Additionally, Panel DOLS and System GMM were applied for regression and comparison analysis between the African markets and South Africa. The estimates disclose that when companies experience lower risk, the costs of adjustment toward the target are higher. Hence, companies can re‐adjust their capital structure more easily by issuing external capital over periods of stable economic environments, thereby improving their market value. Considering the case of South Africa, the first DOLS results outlined similar estimates compared to the African market. Conversely, when measured with System GMM, the estimates imply that firms incur difficulties in adjusting costs, thus reducing leverage due to unfavorable macroeconomic indicators in line with the pecking order theory stating that in African economies, companies spend more on expenses and adjust their capital structure slowly to reach their optimal target position.

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Capital Structure Adjustments and Asymmetric Information

Cited by 3 publications

References 79 publications

Does board gender diversity affect capital structure decisions?

Does board gender diversity affect capital structure decisions?

Asymmetric information and daily stock prices in Brazil

Impact of risk on capital structure adjustments: Evidence from the African markets

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