Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants
Abe de Jong
Erasmus University - Rotterdam School of Management
Thuy Thu Nguyen
Erasmus University Rotterdam (EUR) - Rotterdam School of Management, Department of Finance; Business Administration Faculty, Foreign Trade University
University of Twente - Department of Finance and Accounting
September 1, 2008
Journal of Banking and Finance, Vol. 32, No. 9, 2008
We analyze the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. Our analysis yields two new results. First, we find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of these determinants. Second, although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage.
Number of Pages in PDF File: 41
Keywords: Capital structure, leverage, firm-specific factors, country-specific factors, international evidence
JEL Classification: F30, G10, G32
Date posted: September 7, 2006 ; Last revised: March 14, 2011
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