Capital Structure and Law Around the World

Journal of Multinational Financial Management 21 (2011) 119-150

47 Pages Posted: 4 Nov 2012 Last revised: 26 Nov 2012

See all articles by Paulo F. Pereira Alves

Paulo F. Pereira Alves

CMVM - Portuguese Securities and Exchange Commission, ISCAL and Lusofona University

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Date Written: 2011

Abstract

In this research paper we examine the determinants of capital structure using a large panel of firms from 31 countries, all with different legal systems and different levels of investor protection. Our results confirm that institutional variables play an important role in a firm’s capital structure, although firm-level determinants seem to be similar around the world. The most important conclusion of this research concerns the negative impact of the interaction between shareholder rights and profitability on market leverage. It suggests that the more shareholder rights there are, the fewer asymmetric problems occur.

Keywords: Capital structure, Institutional environment, Market timing

JEL Classification: G32, G38

Suggested Citation

Pereira Alves, Paulo F. and Ferreira, Miguel Almeida, Capital Structure and Law Around the World (2011). Journal of Multinational Financial Management 21 (2011) 119-150 . Available at SSRN: https://ssrn.com/abstract=2170270

Paulo F. Pereira Alves (Contact Author)

CMVM - Portuguese Securities and Exchange Commission, ISCAL and Lusofona University ( email )

Rua Laura Alves n.º 4 Apartado 14258
Lisbon
Portugal

Miguel Almeida Ferreira

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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