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Capital Structure Decisions around the World: Which Factors Are Reliably Important?

Published online by Cambridge University Press:  16 July 2015

Özde Öztekin
Özde Öztekin*
Affiliation:
[email protected], College of Business, Florida International University, Miami, FL 33199.
*
*Corresponding author: [email protected]
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Abstract

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This article examines the international determinants of capital structure using a large sample of firms from 37 countries. The reliable determinants for leverage are firm size, tangibility, industry leverage, profits, and inflation. The quality of the countries’ institutions affects leverage and the adjustment speed toward target leverage in significant ways. High-quality institutions lead to faster leverage adjustments, whereas laws and traditions that safeguard debt holders relative to stockholders (e.g., more effective bankruptcy procedures and stronger creditor protection) lead to higher leverage.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 50 , Issue 3 , June 2015 , pp. 301 - 323
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2015 

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