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What are the Capital Structure Determinants for Tax-Exempt Organizations?


  • Geoffrey Peter Smith


I study the determinants of capital structure in the absence of tax incentives. I find that debt use is positively related to asset tangibility, growth, and size, and negatively related to age, liquidity, and profitability. Tax-exempt sector-specific findings indicate that debt is also positively related to the efficacy of state laws against the misuse of assets and to the percentage of decision makers that are paid and negatively related to decision-maker compensation and to charitable contributions. Religious organizations most commonly borrow from internal sources, those in education use tax-exempt bonds, while human services organizations use mortgages and notes payable. Copyright (c) 2010, The Eastern Finance Association.

Suggested Citation

  • Geoffrey Peter Smith, 2010. "What are the Capital Structure Determinants for Tax-Exempt Organizations?," The Financial Review, Eastern Finance Association, vol. 45(3), pages 845-872, August.
  • Handle: RePEc:bla:finrev:v:45:y:2010:i:3:p:845-872

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    Cited by:

    1. Harvey S. Rosen & Alexander J.W. Sappington, 2016. "To Borrow or Not to Borrow? An Analysis of University Leverage Decisions," Working Papers 249, Princeton University, Department of Economics, Center for Economic Policy Studies..
    2. Harvey S. Rosen & Alexander J. W. Sappington, 2016. "To Borrow or Not to Borrow? An Analysis of University Leverage Decisions," NBER Working Papers 21951, National Bureau of Economic Research, Inc.
    3. Rafal Koziarski, 2013. "Analiza ryzyka przedsiębiorstwa na przykładzie przedsiębiorstwa z branży 35 - Wytwarzanie, przesyłanie, dystrybucja i handel energią elektryczną. Risk analysis of the firm in Sector 35 - Production of," Working Papers hal-00917794, HAL.
    4. Owen Nyang'oro, 2016. "Determinants of Capital Structure of Listed Firms in Kenya and the Impact of Corporate Tax," Research Papers RP_329, African Economic Research Consortium.
    5. Rosen, Harvey S. & Sappington, Alexander J.W., 2016. "To borrow or not to borrow? An analysis of university leverage decisions," Research in Economics, Elsevier, vol. 70(1), pages 170-185.

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