Dynamic Target Capital Structure and Speed of Adjustment in Farm Business

摘要: In corporate finance, the determinants of firm target capital structure have been widely studied. However, less attention has paid to understanding financing behavior Small and Medium Enterprises (SMEs), particularly farm businesses as a distinctive setting. We use dynamic partial adjustment model with panel sample 1500 Dutch farms over years 2001 2015. provide evidence that leverage is time-varying characteristics, pecking-order signalling theories explain this dynamism in business. This result very robust across different types, size categories data periods. Farm asset tangibility growth opportunity significantly determine structure. addition, we find highly persistent (slow speed) lagged best predictor subsequent ratios. Farms exhibit slower during recessions, effect most pronounced for larger farms. Decomposing analysis into horticulture rebalance much faster after shocks. variation mainly attributed difference costs. The results give better insight policy makers financial institutions on impacts policies viability, decision-making process risk profit evaluation. It should also spark discussion about applicability finance