Capital Structure and Religion. Some International Evidence

In the recent years, an increasing number of papers deepened cross-disciplinary studies, examining how different cultural values infl uence financial variables. The main objective of our paper is to test if the dominant world religions (Buddhist, Christian, Hindu, Islamic, and Judaic), and, moreover, some Christian denominations (Catholicism, Protestantism and Eastern Orthodox Christianity) are related to some patterns in capital structure. Our paper considers distinctly the category of countries in which Agnostics, Atheists and non-religious people are predominant. The results are promising. Companies located in the states with predominance of Islamic religion have a lower leverage, while the ones from predominantly Catholic, Eastern Orthodox, Hindu and Judaic countries, as well as those in mainly Agnostic, Atheist and non-religious ones, are indebted more than those from mainly Protestant countries. The debt maturity seems to be correlated to the dominant religions or denominations, with companies in the predominantly Eastern Orthodox, Buddhist and Agnostic, Atheist and non-religious countries relying more on short term debt, and those in the majority Catholic, Judaic and Hindu countries on long term debt.