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Company Financing, Capital Structure, and Ownership: A Survey, and Implications for Developing Economies

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  • Sanjiva Prasad
  • Christopher J. Green
  • Victor Murinde

Abstract

This paper critically surveys the key literature on corporate financing policy, capital structure and firm ownership in order to identify the leading theoretical and empirical issues in this area. The theoretical component of the survey attempts to reconcile competing theories of capital structure and appraises recent models which use agency theory and asymmetric information to explore the impact of managerial shareholdings, corporate strategy and taxation on the firm’s capital structure. The empirical component focuses on univariate analyses as well as multivariate models of capital structure, and makes a comparison between theoretical predictions and empirical results. Implications are identified in terms of promising research ideas (PRIs) for further research. The bulk of the empirical research that we survey is concerned with the experience of a few western industrial countries, and the implications of this research are assessed accordingly. However, we also aim to draw out implications for new research in developing and newly industrialised countries with an expanding corporate sector.

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This chapter was published in:

  • Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2001. "Company Financing, Captial Structure, and Ownership: A Survey, and Implications for Developing Economies," SUERF Studies, SUERF - The European Money and Finance Forum, number 12 edited by Morten Balling.
    This item is provided by SUERF - The European Money and Finance Forum in its series Chapters in SUERF Studies with number 12-1.

    Handle: RePEc:erf:erfssc:12-1

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    1. Richard J. Zeckhauser & John Pound, 1990. "Are Large Shareholders Effective Monitors? An Investigation of Share Ownership and Corporate Performance," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 149-180 National Bureau of Economic Research, Inc.
    2. Zarowin, Paul, 1988. "Non-linearities and nominal contracting effects : The case of the depreciation tax shield," Journal of Accounting and Economics, Elsevier, vol. 10(2), pages 89-110, April.
    3. David T. Llewellyn, 1999. "The New Economics of Banking," SUERF Studies, SUERF - The European Money and Finance Forum, number 5 edited by Morten Balling.
    4. Vilasuso, Jon & Minkler, Alanson, 2001. "Agency costs, asset specificity, and the capital structure of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 55-69, January.
    5. Wald, John, 1999. "Capital structure with dividend restrictions," Journal of Corporate Finance, Elsevier, vol. 5(2), pages 193-208, June.
    6. David Llewellyn, 1999. "The New Economics of Banking," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    7. John Calverley & Sarah Hewin & Kevin Grice, 2000. "Emerging Stock Markets After the Crisis," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    8. van der Wijst, Nico & Thurik, Roy, 1993. " Determinants of Small Firm Debt Ratios: An Analysis of Retail Panel Data," Small Business Economics, Springer, vol. 5(1), pages 55-65, March.
    9. Joseph Bisignano, 1998. "Towards an Understanding of the Changing Structure of Financial Intermediation: An Evolutionary Theory of Institutional Survival," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    10. Rolf Skog, 1997. "Does Sweden Need a Mandatory Bid Rule? A critical analysis," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    11. Joseph Bisignano, 1998. "Towards an Understanding of the Changing Structure of Financial Intermediation - An Evolutionary Theory of Institutional Survival," SUERF Studies, SUERF - The European Money and Finance Forum, number 4 edited by Morten Balling.
    12. Rolf Skog, 1997. "Does Sweden Need a Mandatory Bid Rule? - A Critical Analysis," SUERF Studies, SUERF - The European Money and Finance Forum, number 2 edited by Morten Balling.
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    Cited by:
    1. Bert Scholtens & Dick van Wensveen, 2003. "The Theory of Financial Intermediation: An Essay On What It Does (Not) Explain," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    2. Roberto Di Salvo & Maria Carmela Mazzilis & Andrea Guidi, 2002. "Mergers and Acquisitions Between Mutual Banks in Italy :An analysis of the effects on performance and productive efficiency," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    3. Eduard H. Hochreiter & David T Llewellyn, 2004. "Introduction," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    4. Jean-Paul Abraham, 2004. "Monetary and Financial Thinking in Europe since the Sixties: Evidence from the SUERF Colloquia," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    5. Konstantinos Tzioumis & Leora F. Klapper, 2012. "Taxation and Capital Structure: Evidence from a Transition Economy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(2), pages 165-190, June.
    6. Christian Harm, 2002. "Bank management between shareholders and regulators," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    7. Paula Bongini, 2003. "The EU Experience in Financial Services Liberalization: A Model for GATS Negotiations?," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    8. Luiz Fernando de Paula, 2002. "Banking Internationalisation and the Expansion Strategies of European Banks to Brazil during the 1990s," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    9. Robert Raymond, 2004. "How to complete the Integration of the European Financial Market," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    10. Leora Klapper & Konstantinos Tzioumis, 2008. "Taxation and Capital Structure: evidence from a transition economy," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 16, Hellenic Observatory, LSE.
    11. Helmut Wagner, 2002. "Implications of Globalization for Monetary Policy," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    12. Franco Bruni, 2004. "Fiscal Discipline in a Monetary Union: Issues for the Euro Area," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    13. Juan Sergio Lopez & Alessandra Appennini & Stefania P. S. Rossi, 2002. "Are Italian mutual banks efficient? Evidence from two different cost frontier techniques," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    14. Alexandre Lamfalussy, 2004. "Financial Globalisation and Financial Market Integration in Europe: Challenges Ahead for the European System of Central Banks," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    15. Jean-Paul Abraham & Peter Van Dijcke, 2002. "European Financial Cross-Border Consolidation: At the crossroads in Europe? By exception, evolution or revolution?," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    16. Andrew Hughes Hallett & Svend E Hougaard Jensen & Christian Richter, 2004. "Northern and Eastern Enlargement of EMU: Do Structural Reforms Matter?," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    17. Thomas Dalsgaard & Jørgen Elmeskov & Cyn-Young Park, 2002. "Ongoing Changes in the Business Cycle – Evidence and Causes," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    18. Jean-Claude Trichet, 2004. "Optimal Currency Areas and Implementation of Economic Policies," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.

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