Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants

41 Pages Posted: 7 Sep 2006 Last revised: 14 Mar 2011

Abe de Jong

Erasmus University - Rotterdam School of Management

Thuy Thu Nguyen

Erasmus University Rotterdam (EUR) - Rotterdam School of Management, Department of Finance; Business Administration Faculty, Foreign Trade University

Rezaul Kabir

University of Twente - Department of Finance and Accounting

Date Written: September 1, 2008

Abstract

We analyze the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. Our analysis yields two new results. First, we find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of these determinants. Second, although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage.

Keywords: Capital structure, leverage, firm-specific factors, country-specific factors, international evidence

JEL Classification: F30, G10, G32

Suggested Citation

de Jong, Abe and Nguyen, Thuy Thu and Kabir, Rezaul, Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants (September 1, 2008). Journal of Banking and Finance, Vol. 32, No. 9, 2008. Available at SSRN: https://ssrn.com/abstract=890525 or http://dx.doi.org/10.2139/ssrn.890525

Abe De Jong

Erasmus University - Rotterdam School of Management ( email )

P.O. Box 1738
Room T09-53
3000 DR Rotterdam
Netherlands
+31 10 408 1022 (Phone)

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

Thuy Thu Nguyen

Erasmus University Rotterdam (EUR) - Rotterdam School of Management, Department of Finance ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
0031 1048 2792 (Phone)

Business Administration Faculty, Foreign Trade University ( email )

91 Chua Lang
Dong Da District
Hanoi
Vietnam

Rezaul Kabir (Contact Author)

University of Twente - Department of Finance and Accounting ( email )

Faculty of Behavioral, Management & Social Science
P. O. Box 217
Enschede, 7500 AE
Netherlands
+31 53 489 4512 (Phone)
+31 53 489 2159 (Fax)

HOME PAGE: http://www.utwente.nl/bms/fa/staff/kabir

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