*Associate Professor, Accounting, University of Isfahan, Isfahan, Iran
**Assistant Professor, Economics, University of Isfahan, Isfahan, Iran
***M.A., Finance, University of Isfahan, Isfahan, Iran
Online published on 15 April, 2014.
Recent empirical research documents evidence in firms’ movement towards target leverage and with regard to the fact that estimating the speed of movement towards target leverage is one of the newest topic in the capital structure, this paper investigate the capital structure adjustment speed in the listed companies in Tehran Stock Exchange (TSE). The Studied sample of the research includes 115 firms in the period of 2003–2012. We used partial adjustment model and generalized method of moments (GMM) estimator to estimating the speed of adjustment. As a result, we find evidences that in the studied firms there is target leverage and these firms move fast towards their target leverage. Generally, results of this research support trade-off theory.
Dynamic Trade-off Theory, Partial Adjustment Model, Speed of Adjustment, Target Leverage
