Firm crash risk, information environment, and speed of leverage adjustment ¬リニ

Article history: Received 14 May 2013 Received in revised form 21 January 2015 Accepted 22 January 2015 Available online 30 January 2015 This paper examines the effect of a firm's crash-risk exposure on its speed of leverage adjustment (SOA), and how this effect is influenced by the information environment of the country in which the firm is located.We employ a panel of 19,247 firms across 41 countries from 1989 to 2013, and we find that firms with a higher crash-risk exposure tend to adjust their financial leverages more slowly toward their targets. This evidence supports the dynamic trade-off theory that firms with larger transaction costs adjust their capital structures less often. Equally important, we document that the negative link between crash-risk exposure and SOA is less pronounced in countrieswith a more transparent information environment. © 2015 Elsevier B.V. All rights reserved. JEL classification: G32 G15