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Capital Structure Policies in Europe: Survey Evidence

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  • Brounen, D.
  • Jong, A. de
  • Koedijk, C.G.
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    Abstract

    In this paper we present the results of an international survey among 313 CFOs on capitalstructure choice. We document several interesting insights on how theoretical concepts arebeing applied by professionals in the U.K., the Netherlands, Germany, and France and wedirectly compare our results with previous findings from the U.S. Our results emphasize thepresence of pecking-order behavior. At the same time this behavior is not driven by asymmetricinformation considerations. The static trade-off theory is confirmed by the importance of a targetdebt ratio in general, but also specifically by tax effects and bankruptcy costs. Overall, we findremarkably low disparities across countries, despite the presence of significant institutionaldifferences. We find that private firms differ in many respects from publicly listed firms, e.g. listedfirms use their stock price for the timing of new issues. Finally, we do not find substantialevidence that agency problems are important in capital structure choice.

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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-2005-005-F&A.

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    Date of creation: 01 Feb 2005
    Date of revision:
    Handle: RePEc:dgr:eureri:30002050

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

    Related research

    Keywords: capital structure; international economics; financial economics; debt maturity; equity issues;

    This paper has been announced in the following NEP Reports:

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    Cited by:
    1. Matthias C. Grüninger & Claudia B. Wöhle, 2005. "Warum begeben Unternehmen Wandelanleihen?," Working papers 2005/02, Faculty of Business and Economics - University of Basel.

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