Investigating the Effect of Corporate Governance on Capital Structure Adjustment Speed using Generalized Method of Moments

The main purpose of this paper is investigating the effect of corporate governance mechanism such as stock institutional ownership, ownership concentration, free flow stock, and non-executive directors on capital structure adjustment speed in TSE. In this way, we use data for 114 firms listed on TSE during 2006-2014 and Partial Adjustment models and generalized method of moments for testing hypothesizes. Our findings show that there is a significant indirect relationship between free float stock and non-executive directors with capital structure adjustment speed. But the direct relationship between ownership concentration and stock institutional ownership wasnt significant. The results suggest that adjustment speed for Iranian firms was 57% that's relatively high speed.