Capital Structure Policies in Europe: Survey Evidence

38 Pages Posted: 9 Sep 2005

See all articles by Dirk Brounen

Dirk Brounen

Erasmus University Rotterdam (EUR) - Department of Financial Management; Erasmus Research Institute of Management (ERIM); Tinbergen Institute

Abe de Jong

Rotterdam School of Management, Erasmus University

Kees C. G. Koedijk

Tilburg University - Department of Finance

Date Written: February 1, 2005

Abstract

In this paper we present the results of an international survey among 313 CFOs on capitalstructure choice. We document several interesting insights on how theoretical concepts arebeing applied by professionals in the U.K., the Netherlands, Germany, and France and wedirectly compare our results with previous findings from the U.S. Our results emphasize thepresence of pecking-order behavior. At the same time this behavior is not driven by asymmetricinformation considerations. The static trade-off theory is confirmed by the importance of a targetdebt ratio in general, but also specifically by tax effects and bankruptcy costs. Overall, we findremarkably low disparities across countries, despite the presence of significant institutionaldifferences. We find that private firms differ in many respects from publicly listed firms, e.g. listedfirms use their stock price for the timing of new issues. Finally, we do not find substantialevidence that agency problems are important in capital structure choice.

Keywords: international economics, financial economics, capital structure, debt maturity, equity issues

JEL Classification: M, G3, G32, O32, L15

Suggested Citation

Brounen, Dirk and de Jong, Abe and Koedijk, Kees G., Capital Structure Policies in Europe: Survey Evidence (February 1, 2005). ERIM Report Series Reference No. ERS-2005-005-F&A. Available at SSRN: https://ssrn.com/abstract=797919

Dirk Brounen

Erasmus University Rotterdam (EUR) - Department of Financial Management ( email )

P.O. Box 1738
Room T09-53
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 1 0408 2371 (Phone)
+31 1 0408 9017 (Fax)

HOME PAGE: http://web.eur.nl/fbk/dep/dep5/faculty/dbrounen

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
120-551-3535 (Phone)

Abe De Jong

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-25
Rotterdam, 3000 DR
Netherlands
+31 10 408 1022 (Phone)

HOME PAGE: http://https://www.rsm.nl/people/abe-de-jong/

Kees G. Koedijk (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4663048 (Phone)
+31 13 4662052 (Fax)

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