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Dynamics of capital structure: The case of Korean listed manufacturing companies
School of Economics, Seoul National University, San 56-1, Shinlim-dong, Kwanak-gu, Seoul 151-742, South Korea.
University of Kurdistan Hawler, College of Engineering, Seoul National University, San 56-1, Shinlim-dong, Kwanak-gu, Seoul 151-742, South Korea.ORCID iD: 0000-0002-7902-4683
University of Kurdistan Hawler, College of Engineering, Seoul National University, San 56-1, Shinlim-dong, Kwanak-gu, Seoul 151-742, South Korea.
2006 (English)In: Asian Economic Journal, ISSN 1351-3958, E-ISSN 1467-8381, Vol. 20, no 3, 275-302 p.Article in journal (Refereed) Published
Abstract [en]

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. ©2006 East Asian Economic Association and Blackwell Publishing Ltd.

Place, publisher, year, edition, pages
2006. Vol. 20, no 3, 275-302 p.
Keyword [en]
capital flow; debt; financial crisis; manufacturing; panel data, Asia; Eurasia; Far East; Korea
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-24480DOI: 10.1111/j.1467-8381.2006.00236.xScopus ID: 2-s2.0-33748316623OAI: oai:DiVA.org:hj-24480DiVA: diva2:742822
Available from: 2014-09-02 Created: 2014-09-01 Last updated: 2016-01-14Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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