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Capital Structure in South Korea: A Quantile Regression Approach

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Author Info

  • Bassam Fattouh

    ()
    (University of London - School of Oriental and African Studies (SOAS)
    University of London - Centre for Financial & Management Studies (CeFIMS))

  • Laurence Harris

    (University of London - Centre for Financial and Management Studies)

  • Pasquale Scaramozzino

    ()
    (University of Rome II - Faculty of Economics
    SOAS, University of London - Department of Financial and Management Studies)

Abstract

Knowledge of how South Korean firms choose their capital structures has particular value due to the country's specific corporate structure and the role of leverage in the evolution of its financial crisis of 1997. Using a large panel for the years 1992-2001 we investigate the evolution and determinants of South Korean firms' capital structure and focus on the differences between firms in different quantiles of the debt-capital distribution. Although regression estimates find that standard variables for asymmetric information costs explain South Korean firms' debt-capital ratios, conventional techniques using conditional means of the variables do not take full account of the heterogeneity of the sample of firms. Conditional quantile regressions show that while variables associated with standard models are significant throughout the distribution, there are considerable differences, including differences in sign, in their impact on firms with different levels of leverage. Those observed non-linearities in the determinants of capital structure are consistent with a model of capital structure that includes both costs resulting from asymmetric information and an upper bound on the debt-capital ratio.

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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 40.

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Length: 30
Date of creation: 05 Dec 2003
Date of revision:
Handle: RePEc:rtv:ceisrp:40

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

Related research

Keywords: Capital structure; Quantile regression; South Korea JEL Classifications: G32; O53;

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References

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Citations

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Cited by:
  1. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, Springer, vol. 39(1), pages 179-205, July.
  2. Pasquale Scaramozzino, 2006. "Measuring Vulnerability to Food Insecurity," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 06-12, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  3. Manuel Landajo & Javier de Andrés & Pedro Lorca, 2008. "Measuring firm performance by using linear and non-parametric quantile regressions," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 57(2), pages 227-250.
  4. repec:hhs:slucer:2014_007 is not listed on IDEAS
  5. Ibrahimo, M.V. & Barros, C.P., 2009. "Relevance or irrelevance of capital structure?," Economic Modelling, Elsevier, Elsevier, vol. 26(2), pages 473-479, March.
  6. Wu, Feng & Guan, Zhengfei, 2008. "Farm Capital Structure Choice under Credit Constraint: Theory and Application," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 6130, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. repec:ise:isegwp:wp52010 is not listed on IDEAS
  8. Drescher, Larissa S. & Goddard, Ellen W., 2011. "Heterogeneous Demand for Food Diversity: A Quantile Regression Analysis," 51st Annual Conference, Halle, Germany, September 28-30, 2011, German Association of Agricultural Economists (GEWISOLA) 114484, German Association of Agricultural Economists (GEWISOLA).
  9. Guilherme Resende Oliveira & Benjamin Miranda Tabak & José Guilherme de Lara Resende & Daniel Oliveira Cajueiro, 2012. "Determinantes da Estrutura de Capital das Empresas Brasileiras: uma abordagem em regress˜ao quantílica," Working Papers Series, Central Bank of Brazil, Research Department 272, Central Bank of Brazil, Research Department.
  10. Mamatzakis, E & Koutsomanoli-Filippaki, Anastasia & Pasiouras, Fotios, 2012. "A quantile regression approach to bank efficiency measurement," MPRA Paper 51879, University Library of Munich, Germany.
  11. Kiran Krishnamurthy, Chandra & Kriström, Bengt, 2013. "Determinants of the price-premium for Green Energy: Evidence from an OECD cross-section," CERE Working Papers 2013:7, CERE - the Center for Environmental and Resource Economics, revised 30 Jun 2014.
  12. Selim Aren & Lutfihak Alpkan & Bulent Sezen & Ziya Alper Guncu, 2011. "Drivers of firms’ debt ratios: evidence from Taiwanese and Turkish firms," Journal of Business Economics and Management, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 53-70, May.
  13. Sánchez-Vidal, F. Javier, 2014. "High debt companies' leverage determinants in Spain: A quantile regression approach," Economic Modelling, Elsevier, Elsevier, vol. 36(C), pages 455-465.

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