Norwegian Companies' Capital Structure: An Overview

Abstract

This paper is the first comprehensive documentation of the capital structure of the population of Norwegian private and public companies. By the use of a well specified dataset with 138,990 firms and 852,862 firm-years for the years 1992-2005, I manage both to analyze overall capital structure as well as relevant and still large sub-samples. The subsamples reflect size and listed/unlisted firms, as well as groups expected to differ in terms of financial constraints, e.g., dividend payers or firms that have received formal notifications from their auditors. I also include a limited analysis of capital structure including capitalized rental agreements and find significantly increased adjusted leverage ratios. Leverage ratios are analyzed in a dynamic panel regression using the System GMM-method proposed by Blundell and Bond (1998). The results confirm known US findings regarding "partial adjustment" of leverage and shows in addition interesting variations by subgroups. The analysis also highlights the sensitivity of the results to the choice of regression method. The main contributions of the paper are to document a national population of firms, show drivers of changes in leverage, illustrate the effects of including capitalized rents in overall leverage and exemplify the importance of panel regression methodology.

Keywords: Capital structure, leasing, private companies, GMM

JEL Classification: C23, G32, G35