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

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  • Jong, A. de
  • Kabir, R.
  • Nguyen, T.T.

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 firm-specific factors. 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.

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File URL: http://hdl.handle.net/1765/10517
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Bibliographic Info

Paper provided by 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 University Rotterdam. in its series Research Paper with number ERS-2007-058-F&A.

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Date of creation: 11 Sep 2007
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Handle: RePEc:dgr:eureri:300011784

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Web page: http://www.erim.eur.nl/

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

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Cited by:
  1. Kayo, Eduardo K. & Kimura, Herbert, 2011. "Hierarchical determinants of capital structure," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 358-371, February.
  2. Lucey, Brian M. & Zhang, QiYu, 2011. "Financial integration and emerging markets capital structure," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1228-1238, May.
  3. Lars P. Feld & Jost Henrich Heckemeyer & Michael Overesch, 2011. "Capital Structure Choice and Company Taxation: A Meta-Study," CESifo Working Paper Series 3400, CESifo Group Munich.
  4. Shehzad, Choudhry Tanveer & de Haan, Jakob & Scholtens, Bert, 2010. "The impact of bank ownership concentration on impaired loans and capital adequacy," Journal of Banking & Finance, Elsevier, vol. 34(2), pages 399-408, February.
  5. Ferris, Stephen P. & Jayaraman, Narayanan & Sabherwal, Sanjiv, 2009. "Catering effects in corporate dividend policy: The international evidence," Journal of Banking & Finance, Elsevier, vol. 33(9), pages 1730-1738, September.
  6. Brian M. Lucey, QiYu Zhang* School of Business, Trinity College Dublin, Ireland, 2009. "Emerging Markets Capital Structure and Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp305, IIIS.
  7. Tore Ellingsen & Eirik Gaard Kristiansen, 2011. "Financial Contracting Under Imperfect Enforcement," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 323-371.
  8. Ronald E. Shrieves & Drew Dahl & Michael F. Spivey, 2009. "Capital Market Regimes and Bank Structure in Europe," Working Papers 200807, Utah State University, Department of Economics and Finance.
  9. Lyandres, Evgeny & Zhdanov, Alexei, 2010. "Accelerated investment effect of risky debt," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2587-2599, November.
  10. Ampenberger, Markus & Schmid, Thomas & Achleitner, Ann-Kristin & Kaserer, Christoph, 2009. "Capital structure decisions in family firms: empirical evidence from a bank-based economy," CEFS Working Paper Series 2009-05, Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München.
  11. Andrikopoulos, Andreas, 2009. "Irreversible investment, managerial discretion and optimal capital structure," Journal of Banking & Finance, Elsevier, vol. 33(4), pages 709-718, April.
  12. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
  13. Alves, Paulo F. Pereira & Ferreira, Miguel A., 2011. "Capital structure and law around the world," Journal of Multinational Financial Management, Elsevier, vol. 21(3), pages 119-150, July.
  14. Engelen, Peter-Jan & van Essen, Marc, 2010. "Underpricing of IPOs: Firm-, issue- and country-specific characteristics," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1958-1969, August.
  15. Hans Degryse & Peter Goeij & Peter Kappert, 2012. "The impact of firm and industry characteristics on small firms’ capital structure," Small Business Economics, Springer, vol. 38(4), pages 431-447, May.
  16. Barry, Christopher B. & Mann, Steven C. & Mihov, Vassil & Rodríguez, Mauricio, 2009. "Interest rate changes and the timing of debt issues," Journal of Banking & Finance, Elsevier, vol. 33(4), pages 600-608, April.
  17. Joseph P.H. Fan & Sheridan Titman & Garry Twite, 2010. "An International Comparison of Capital Structure and Debt Maturity Choices," NBER Working Papers 16445, National Bureau of Economic Research, Inc.
  18. Malikane, Christopher, 2012. "Inflation dynamics and the cost channel in emerging markets," MPRA Paper 42688, University Library of Munich, Germany.
  19. Verwijmeren, Patrick & Derwall, Jeroen, 2010. "Employee well-being, firm leverage, and bankruptcy risk," Journal of Banking & Finance, Elsevier, vol. 34(5), pages 956-964, May.
  20. Panayiotis Artikis & Georgia Nifora, 2012. "Capital Structure, Macroeconomic Variables & Stock Returns. Evidence from Greece," International Advances in Economic Research, Springer, vol. 18(1), pages 87-101, February.
  21. Nofsinger, John R. & Wang, Weicheng, 2011. "Determinants of start-up firm external financing worldwide," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2282-2294, September.

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