THE IMPACT OF DEFICIT OR SURPLUS FIRM, CORPORATE INCOME TAX ON THE SPEED OF ADJUSTMENT TOWARD TO TARGET LEVERAGE
Research on financial behavior, especially in the capital structure has shifted and evolved. This development can not be separated from the absence of a superior result against one of the theories of capital structure that exists today. In the recent period, the dynamic capital structure has become a major interesting topic to shift the static capital structure . Previous studies show that most adjustments occur when firms have above target debt with a financial surplus or when they have below target debt with a financial (Byoun, 2008)). This results contrast with the results of studies conducted by Dang and Garrett (2015). Related prior research, we will analyze how the surplus or deficit firms affecting the company's capital structure and how the firms adjust their current leverage toward their target. And whether there is a speed of adjustment difference between surplus with deficit firm. We use the annual financial report data from 2008 to 2015 of companies incorporated in the manufacturing industry in Indonesia Stock Exchange (IDX) to answer the research questions. The reason we use this period because in that time there is a tax rate changes. Where the tax rate as a component that is considered to have benefits in the capital structure theory. Our results showed that surplus and deficit firms have different level of speed of adjustment toward to target leverage.