Determinants of Capital Structure: An Expanded Assessment

58 Pages Posted: 19 Dec 2018 Last revised: 25 Apr 2019

See all articles by Toshinori Fukui

Toshinori Fukui

Brigham Young University - Department of Finance

Todd Mitton

Brigham Young University - J. Willard and Alice S. Marriott School of Management

Robert J. Schonlau

Miami University - Farmer School of Business

Date Written: April 19, 2019

Abstract

We empirically evaluate 56 proposed determinants of capital structure in terms of statistical significance, economic significance, identification, and intertemporal stability. We present a unified capital structure framework in which each proposed determinant represents a constraint on shareholder value maximization in interactions with related parties. We find that truly robust and economically important determinants of debt ratios are rare. However, the evidence as a whole shows that the strongest determinants are those related to shareholder interactions with prospective equityholders and debtholders. Determinants related to shareholder interactions with other parties—such as managers, suppliers, and government—are less relevant for the capital structure decision.

Keywords: capital structure

JEL Classification: G32

Suggested Citation

Fukui, Toshinori and Mitton, Todd and Schonlau, Robert J., Determinants of Capital Structure: An Expanded Assessment (April 19, 2019). Available at SSRN: https://ssrn.com/abstract=3293965 or http://dx.doi.org/10.2139/ssrn.3293965

Toshinori Fukui

Brigham Young University - Department of Finance ( email )

United States
801-400-1169 (Phone)

Todd Mitton (Contact Author)

Brigham Young University - J. Willard and Alice S. Marriott School of Management ( email )

Provo, UT 84602
United States
801-422-1763 (Phone)

Robert J. Schonlau

Miami University - Farmer School of Business ( email )

Oxford, OH 45056
United States

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