Capital Structure Targeting: Some New International Evidence

47 Pages Posted: 5 Jun 2018 Last revised: 19 Nov 2019

See all articles by Ali Gungoraydinoglu

Ali Gungoraydinoglu

Florida International University (FIU)

Özde Öztekin

Florida International University (FIU)

Date Written: November 16, 2019

Abstract

This study provides evidence on the financial leverage targeting behavior for firms in a large international setting. Leverage targets and target deviations are plausibly influenced by the institutional environment and financial conditions. Firms from countries with strong legal institutions target lower leverage and higher long-term debt, whereas a financial structure based on the effectiveness of capital markets and better-functioning financial systems result in lower target leverage and lower long-term debt. Financial crisis has led to more prevalent target deviations. Better institutions and financial development significantly decrease the likelihood of target deviations.

Keywords: Target Capital Structure, Debt Maturity, International, Institutions

JEL Classification: G20, G32

Suggested Citation

Gungoraydinoglu, Ali and Öztekin, Özde, Capital Structure Targeting: Some New International Evidence (November 16, 2019). Available at SSRN: https://ssrn.com/abstract=3183327 or http://dx.doi.org/10.2139/ssrn.3183327

Ali Gungoraydinoglu (Contact Author)

Florida International University (FIU) ( email )

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

Özde Öztekin

Florida International University (FIU) ( email )

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

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