The determinants of capital structure: evidence from Dutch panel data
AbstractThis paper studies the determinants of capital structure choice of Dutch firms. Our main objective is to investigate whether and to what extent the main capital structure theories can explain capital structure choice of Dutch firms. A better understanding of the capital structure determinants in a rela-tively small yet open industrialized economy is essential not only for enrich-ing empirical studies in this field, but also for the purpose of cross country asset evaluation. By estimating a panel data model explaining both the ab-solute level of leverage with respect to various factors and the year-to-year changes in leverage with respect to the changes of various factors, we find evidence suggesting the relevance of the pecking order hypothesis in ex-plaining the financing choice of Dutch firms, which implies the importance of asymmetric information models in explaining capital structure choice of Dutch firms. We argue that factors based on agency costs and corporate con-trol considerations are relatively unimportant for the Dutch case.
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Bibliographic InfoPaper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 99E14.
Date of creation: 1999
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-05-10 (All new papers)
- NEP-CFN-1999-05-10 (Corporate Finance)
- NEP-FIN-1999-05-10 (Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Kim, Wi Saeng & Sorensen, Eric H., 1986. "Evidence on the Impact of the Agency Costs of Debt on Corporate Debt Policy," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 21(02), pages 131-144, June.
- 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.
- Tijs Bie & Leo Haan, 2007.
"Market Timing and Capital Structure: Evidence for Dutch Firms,"
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- Tijs de Bie & Leo de Haan, 2004. "Does market timing drive capital structures? A panel data study for Dutch firms," DNB Working Papers 016, Netherlands Central Bank, Research Department.
- Chakraborty, Indrani, 2010. "Capital structure in an emerging stock market: The case of India," Research in International Business and Finance, Elsevier, vol. 24(3), pages 295-314, September.
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