Firms adjust their capital structures to avoid financial distress and bankruptcy to sustain in the market. Asian firms have significantly different financial patterns than their USA and European counterparts. The moderation model gains a better understanding of the relationship between the model variables. We tested the moderating roles of life cycle stages and macro-economic factor gross national income per capita to find their moderating impacts on the speed of adjustment towards target capital structures of Asian manufacturing firms from 2010 to 2018. Our sample of manufacturing industries comes from the eleven Asian economies. We used the dynamic GMM model to estimate moderating impacts and applied the pooled OLS and fixed effect estimations to test the validity of the coefficient of lagged leverage. We find that life cycle stages have positive moderating impacts, and different gross national incomes per capita have no significant effects in adjusting the capital structure. We test the combined moderating impacts of the life cycle and gross national income by applying the full model. The results reveal that moderator variables significantly impact adjusting the target capital structure. From the policy perspective, it is recommended that investors should consider the firms’ life cycle stages and per capita income of the economy in making their international investment portfolios. The government should ensure requisite finance for firms at subsidized interest rates to financially support them at critical stages like introduction and decline.

Purpose: Firms have different costs and benefits and asymmetric information across their life cycle stages and hence each stage has different financial pattern and speed of adjustment towards target capital. Methodology: We use System GMM to test the hypotheses. We use market leverages proxies for the capital structure, life cycle proxies: introduction, growth, mature, shakeout and decline and the control determinants of capital structure such as profitability, tangibility, firm size and growth opportunities. We estimate the financial pattern and speed of adjustment along life cycle stages of manufacturing firms from eleven Asian economies over the period of 2010-2018. Findings: The results show that firms in earlier stages have more long term debt than mature stage. The speed of adjustment towards target capital structure is highest in mature stage than the other stages. The control determinants significantly affect market leverages. Implications: The findings suggest that management has to consider life cycle stages of their firms in order to adjust capital structure. Stockholders should consider stage of firm with relation to profitability and capital structure for long term prospects.