Firm- and Country-Level Determinants of Corporate Leverage: Some New International Evidence

36 Pages Posted: 15 May 2011 Last revised: 25 May 2018

See all articles by Ali Gungoraydinoglu

Ali Gungoraydinoglu

Florida International University (FIU)

Özde Öztekin

Florida International University (FIU)

Date Written: May 1, 2011

Abstract

This research analyzes the determinants of capital structure across 37 countries. Institutional arrangements matter for capital structure decisions; however, firm-level covariates drive two-thirds of the variation in capital structure across countries, while the country-level covariates explain the remaining one-third. The observed relationships between the country-level determinants and leverage provide strong support to the predictions of both the trade-off and the pecking-order theories. Country-level determinants serve as substitute mechanisms for the firm-level, industry-level, and macroeconomic determinants by moderating their marginal impact on leverage.

Keywords: Dynamic capital structure, International, Institutions, Trade-off, Pecking order

JEL Classification: G20, G32

Suggested Citation

Gungoraydinoglu, Ali and Öztekin, Özde, Firm- and Country-Level Determinants of Corporate Leverage: Some New International Evidence (May 1, 2011). Journal of Corporate Finance, Volume 17, Issue 5, December 2011, Pages 1457-1474. Available at SSRN: https://ssrn.com/abstract=1841628 or http://dx.doi.org/10.2139/ssrn.1841628

Ali Gungoraydinoglu

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Özde Öztekin (Contact Author)

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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