Determinants of Capital Structure in Non-Financial Companies

Arbeitspapier

In this paper, we evaluate firm-, industry- and country-specific factors determining a firm's capital structure. The empirical validity of several capital structure theories has been ambiguous so far. We shed light on the main drivers of leverage and depict differences in industry and country characteristics. Using a short panel data set with a large cross-section, we are able to show that firm size, industry leverage, industry growth and tax shield positively affect leverage ratios, while profitability and liquidity have negative impacts. Moreover, our model is an improvement over Rajan and Zingales' (1995) four-factor core model in terms of explaining data variation. The results are robust against different panel estimators, decompositions and over time.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2014-38

Classification and Topics

• Classification: Wirtschaft ; Financial Aspects of Economic Integration ; Information and Market Efficiency; Event Studies; Insider Trading ; International Financial Markets ; General Financial Markets: Government Policy and Regulation ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Capital Structure ; Non-Financial Companies ; Pecking Order Theory ; Trade-off Theory

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kühnhausen, Fabian ; Stieber, Harald W.
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2014

Further information

• DOI: doi:10.5282/ubm/epub.21167
• Handle: http://hdl.handle.net/10419/104436
• URN: urn:nbn:de:bvb:19-epub-21167-1
• Last update: 10.03.2025, 11:43 AM CET