Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants

45 Pages Posted: 15 Oct 2007

See all articles by Abe de Jong

Abe de Jong

Monash University; University of Groningen; European Corporate Governance Institute (ECGI)

Rezaul Kabir

University of Twente

Thuy Thu Nguyen

Erasmus University Rotterdam (EUR) - Rotterdam School of Management, Department of Finance; Business Administration Faculty, Foreign Trade University

Date Written: September 11, 2007

Abstract

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 firm-specific factors. 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.

Keywords: country-specific factors, firm-specific factors, leverage, Capital structure, international evidence

Suggested Citation

de Jong, Abe and Kabir, Rezaul and Nguyen, Thuy Thu, Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants (September 11, 2007). ERIM Report Series Reference No. ERS-2007-058-F&A, Available at SSRN: https://ssrn.com/abstract=1019130

Abe De Jong (Contact Author)

Monash University ( email )

900 Dandenong Rd
Room H3-56
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://research.monash.edu/en/persons/abe-de-jong

University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Rezaul Kabir

University of Twente ( email )

Faculty of Behavioral, Management & Social Science
P. O. Box 217
Enschede, 7500 AE
Netherlands
+31 53 489 5355 (Phone)

Thuy Thu Nguyen

Erasmus University Rotterdam (EUR) - Rotterdam School of Management, Department of Finance ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
0031 1048 2792 (Phone)

Business Administration Faculty, Foreign Trade University ( email )

91 Chua Lang
Dong Da District
Hanoi
Vietnam

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