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The purpose of this paper is to test the validity of dynamic tradeoff theory and argue that the speed of adjustment toward the target capital structure may vary depending primarily on some inherent firm characteristics.

The objective of this article is to study the impact of the corporate governance arrangements on the capital structure behavior taken by listed French firms. The author measures the corporate governance arrangements in three different ways to capture its influences on the capital structure and analyze how it affects a firm's rebalancing behavior in the presence of relevant control variables. Assuming that costs related to deviations from the target leverage are positively correlated with the duration of the deviation, the author finds that firms with a strong governance system adjust at a faster rate because the longer the deviation lasts, the greater the loss in firm value. In addition, firms with more efficient governance structures face lower adjustment costs.

The author measures corporate governance quality in different ways by using several proxies. The results make a major contribution to the literature and show that the quality of the governance system is an important factor in helping the company achieve fatly its target leverage. The authors produces further support for the initial finding by showing that the two extreme leverage deviation groups are dominated by firms with weak governance. The author also shows that the rebalancing speed is faster for firms with strong governance systems.

The paper proposes that a firm characterized by a strong governance system will display a shorter-duration deviation from the target capital structure and a higher adjustment level than a firm with weak governance. In other words, the author argues that the deviation from the target capital structure and the adjustment level are related to the quality of corporate governance. The results indicate that firms with a stronger governance structure are characterized by shorter-term deviations from the target. The author also finds that firms belonging to the two subsamples where leverage deviation is at extremely high or low levels are characterized by a weak governance system. The results corroborate the hypothesis on the speed of adjustment toward the desired target leverage. Furthermore, the author empirically proves that the adjustment level of firms with stronger governance is higher in both extreme leverage situations. This paper extends the existing literature on capital structure adjustment by introducing the effect of corporate governance.

Initial public offerings (IPOs) underpricing is a world-wide phenomenon in the stock market. It is generally explained with asymmetric information and risk. The purpose of this paper is to complement these traditional explanations with a theory where investors also worry about the after-market illiquidity that may result from asymmetric information after the IPO.

The model blends such liquidity concerns with adverse selection and risk as motives for underpricing and liquidity. The model's predictions are supported by evidence for 798 French IPOs realized between 1995 and 2008. Using various measures of liquidity, the author finds that expected after-market liquidity and liquidity risk are important determinants of IPO underpricing.

The author finds evidence that less liquid the aftermarket is expected to be, and the less predictable its liquidity, the larger will be the IPO underpricing.

The study provides empirical evidence that shares outstanding and author IPO characteristics play a vital role on post-IPO liquidity. According to the results obtained, three IPO characteristics, that is, relative size, blockholder and underpricing of offering have an explanatory for the liquidity and trading activity of the shares outstanding. It should be noted that this explanatory power is much greater before isolating the market effect. Nevertheless, given the evidence to show that these operations are executed during upmarket periods when trading volume is high, the non-exclusion of the market effect may attribute these variables with more explanatory power than they actually possess. Be that as it may, even after eliminating the market effect, their explanatory capacity is still considerable.

The author has found that underpricing is negatively related to the breadth of shareholders but positively related to institutional shareholders after the IPO. When a company is underpriced, it is likely, on average, to have a higher breadth of shareholder base and lower concentration of large outside investors.