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The determinants of capital structure: evidence from Dutch panel data

Author

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  • Chen, Linda H.
  • Lensink, Robert
  • Sterken, Elmer

    (Groningen University)

Abstract

This 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.

Suggested Citation

  • Chen, Linda H. & Lensink, Robert & Sterken, Elmer, 1999. "The determinants of capital structure: evidence from Dutch panel data," Research Report 99E14, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    • Handle: RePEc:gro:rugsom:99e14
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    File URL: http://irs.ub.rug.nl/ppn/182361489
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    2. Cziráki, Péter, 2007. "A tőkestruktúra empirikus vizsgálata a magyar és az osztrák tőzsdén jegyzett vállalatok körében [An empirical investigation of the capital structure of Austrian and Hungarian listed companies]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 703-715.
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    4. Songul KAKILLI ACARAVCI, 2015. "The Determinants of Capital Structure: Evidence from the Turkish Manufacturing Sector," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 158-171.
    5. Shab Hundal & Annika Sandstrom & Assel Uskumbayeva, 2018. "The Impact Of The Financial Crisis On Corporate Capital Structure Dynamics In The Nordic Countries," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 6(3), pages 34-51.
    6. 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.
    7. Tijs Bie & Leo Haan, 2007. "Market Timing and Capital Structure: Evidence for Dutch Firms," De Economist, Springer, vol. 155(2), pages 183-206, June.
    8. 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.
    9. Prasetyantoko, Agustinus, 2008. "Financing Policies and Firm Vulnerability in Indonesia," MPRA Paper 6533, University Library of Munich, Germany.
    10. Songül KAKÝLLÝ ACARAVCI & Tülin URAL & Yunus KARAÖMER, 2018. "Hisse Senedi Getirisi ve Sermaye Yapýsý Ýliþkisine Etki Eden Faktörlerin Yapýsal Eþitlik Modellemesi ile Analizi," Isletme ve Iktisat Calismalari Dergisi, Econjournals, vol. 6(4), pages 26-38.
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    12. Chaido Dritsak, 2015. "Box Jenkins Modeling of Greek Stock Prices Data," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 740-747.

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