Abstract

http://ssrn.com/abstract=567650
 
 

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Capital Structure Decisions: Which Factors are Reliably Important?


Murray Z. Frank


University of Minnesota

Vidhan K. Goyal


Hong Kong University of Science & Technology - Department of Finance

October 10, 2007


Abstract:     
This paper examines the relative importance of many factors in the leverage decisions of publicly traded American firms from 1950 to 2003. The most reliable factors are median industry leverage (+ effect on leverage), market-to-book ratio (-), tangibility (+), profits (-), log of assets (+), and expected inflation (+). Industry subsumes a number of smaller effects. The empirical evidence seems reasonably consistent with some versions of the tradeoff theory of capital structure.

Number of Pages in PDF File: 60

Keywords: Capital structure, pecking order, trade-off theory, market timing, multiple imputation

JEL Classification: G32

working papers series


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Date posted: July 24, 2004 ; Last revised: December 11, 2007

Suggested Citation

Frank, Murray Z. and Goyal, Vidhan K., Capital Structure Decisions: Which Factors are Reliably Important? (October 10, 2007). Available at SSRN: http://ssrn.com/abstract=567650 or http://dx.doi.org/10.2139/ssrn.567650

Contact Information

Murray Z. Frank
University of Minnesota ( email )
Carlson School of Management
321 19th Avenue South
Minneapolis, MN 55455
United States
612-625-5678 (Phone)
Vidhan K. Goyal (Contact Author)
Hong Kong University of Science & Technology - Department of Finance ( email )
Clear Water Bay, Kowloon
Hong Kong
852-2358-7678 (Phone)
852-2358-1749 (Fax)
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