Opaque Information, Deviation from Target Leverage and Speed of Adjustment

Document Type : Research Paper


Department of Accounting, Bu-Ali Sina University, Hamedan, Iran



Information opacity leads to information asymmetry. In this situation, in providing their own financial needs, firms face limitations and inevitably provide their financial needs from the debt market by signalling private information to it. In addition, information opacity affects the leverage adjustment speed. This research investigates the effect of information opacity on deviation from target leverage and its’ adjustment speed during 2003 - 2017 in 131 firms listed in Tehran Stock Exchange. To estimate the research models, we use the regression analysis with panel data approach, the approach to control the effects of years and industries and the generalized method of moments with system estimator (system GMM). The research results show that the increase in information opacity increases (decreases) the positive (negative) deviation from target leverage. Also, research findings indicate that the increase in information opacity decreases the adjustment speed.


Main Subjects

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Volume 4, Issue 2
May 2019
Pages 15-29
  • Receive Date: 23 February 2019
  • Revise Date: 08 April 2019
  • Accept Date: 19 April 2019
  • First Publish Date: 01 May 2019