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

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  • de Jong, A.
  • 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://repub.eur.nl/pub/10517/ERS-2007-058-F&A.pdf
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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 ERIM Report Series Research in Management with number ERS-2007-058-F&A.

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Date of creation: 11 Sep 2007
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Handle: RePEc:ems:eureri:10517

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Postal: RSM Erasmus University & Erasmus School of Economics, PoBox 1738, 3000 DR Rotterdam
Phone: 31-10-408 1182
Fax: 31-10-408 9020
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Web page: http://www.erim.eur.nl/
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Keywords: Capital structure; country-specific factors; firm-specific factors; international evidence; leverage;

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