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Leverage adjustment after mergers and acquisitions
Author(s) -
Khoo Joye,
Durand Robert B.,
Rath Subhrendu
Publication year - 2017
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12148
Subject(s) - profitability index , leverage (statistics) , exploit , cash , business , capital structure , monetary economics , mergers and acquisitions , industrial organization , finance , economics , computer science , debt , computer security , machine learning
Abstract Australian firms have leverage targets. Speeds of adjustment to a target capital structure are higher than previously published estimates when there are major disruptions to firms’ leverage ratios. Firms exploit company‐specific characteristics to achieve these targets. Profitability and cash levels are important drivers of the speeds of adjustment. Firms, which have lower profitability or higher cash levels, appear to adjust faster .