An Empirical Study on the Determinants of the Capital Structure of Thai Firms

Abstract

This study presents empirical evidence on the determinants of the capital structure of non-financial firms in 1996. Empirical results imply that the tax effect, the signaling effect and the agency costs play a role in financing decisions. Ownership structure also effects financial policy. Single-family owned firms have significantly higher debt level. Only in single-family owned firms does managerial shareholdings have consistently positive influence on firm leverage. Finally large shareholders affect the debt ratio negatively, implying that they may monitor the management.

Keywords: Capital structure; Ownership structure; Corporate governance; Agency costs; Thailand

JEL Classification: G32