Macroeconomic Influences on Corporate Capital Structure
9 Pages Posted: 1 May 2006
Date Written: April 2006
This paper provides new evidence of how macroeconomic conditions affect firms' capital structure choice in Nepalese context. The macroeconomic variables are significant for firm's capital structure choice. GDP growth rate and inflation revealed negatively related to leverage ratio whereas stock market capitalization revealed as positively related to leverage ratio. Higher economic growth tends to cause to use more long-term debt and as capital markets become more developed, they become a viable option for corporate financing.
Keywords: Capital Structure, Macroeconomy
JEL Classification: G32
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