We survey managers in 16 European countries on the determinants of capital structure. Financial flexibility and earnings per share dilution are primary concerns of managers in issuing debt and common stock, respectively. Managers also value hedging considerations and use “windows of opportunity” when raising capital. We find that although a country’s legal environment is an important determinant of debt policy, it plays a minimal role in common stock policy. We find that firms’ financing policies are influenced by both their institutional environment and their international operations. Firms determine their optimal capital structures by trading off costs and benefits of financing.
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Article provided by Financial Management Association in its journal Financial Management.
Volume (Year): 33 (2004) Issue (Month): 4 (Winter) Pages: Download reference. The following formats are available: HTML,
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Handle: RePEc:fma:fmanag:bancelmittoo04
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Brounen, D. & Jong, A. de & Koedijk, C.G., 2005.
"Capital Structure Policies in Europe: Survey Evidence,"
Research Paper
ERS-2005-005-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
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