Working Papers, Department of Economics, Lund University
Dynamic Capital Structure: the Case of Hufvudstaden
Abstract: This paper introduces a new approach of testing capital
structure hypothesis on a firm specific level. Johansenís procedure for
cointegration testing is employed to test theories of optimal capital
structure. The sample covers a firm with unique properties, Hufvudstaden,
during the period 1938 until present. The approach of cointegration allows
testing of long-run equilibrium between non-stationary time-series. We find
empirical support that capital structure follow a dynamic equilibrium path.
However, this equilibrium is more complex as posited by existing theories.
The result is found for leverage measured as both book-value- and
Keywords: capital structure; cointegration; dynamic capital structure; (follow links to similar papers)
JEL-Codes: C32; G32; (follow links to similar papers)
15 pages, November 14, 2000
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