How Does Industry Affect Speed of Adjustment to Target Leverage

Student: Anokhin Anton

Faculty: International College of Economics and Finance

Educational Programme: Double degree programme in Economics of the NRU HSE and the University of London (Bachelor)

Year of Graduation: 2020

A two-step dynamic partial adjustment model is used to estimate speed of adjustment and how industry-specific factors affect the adjustment speed to target capital structure. The study comprises all theories and evidences on industry and build research of SOA on industrial differences. Specifically, three industrial characteristics are evaluated: Munificence, Concentration and Dynamism. Basing on the US data for 98% publicly traded firms these coefficients were calculated. New evidences from developed market suggests that SOA is lower in concentrated and munificent industries and lower in dynamic industries. Also, SOA and its firm-specific determinants are analyzed across industries. Statistics suggest that SOA is heterogeneous across industries. The aspects of Energy, Health Care and Consumer Stables industries are discussed.

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