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The moderating effect of firm age on capital structure choices: evidence from emerging markets

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  • Bolaji Tunde Matemilola

    (Universiti Putra Malaysia, UPM Serdang)

  • Ploypailin Kijkasiwat

    (Khon Kaen University)

  • Chee Yoong Liew

    (UCSI University Malaysia)

Abstract

This research analyses how a firm’s age moderates the link between emerging market firm characteristics such as their profitability, firm size, asset tangibility, and their financing decisions (i.e., the level of leverage undertaken by these firms). Our empirical analysis reveals more evidence that firm age, as a firm-specific factor, not only amplifies the negative influence of profitability on leverage but also reinforces the adverse relationship between firm size and leverage. In addition, we also found that firm age weakens the positive relationship between asset tangibility and leverage. This research contributes to the corporate finance, corporate governance and emerging market finance literature by analysing how firm age influences the effects of emerging market firm characteristics. Additionally, this study contributes to the growing literature on the determinants of the gearing of firms, particularly on the role of firm-specific factors in explaining the variation in firms’ leverage.

Suggested Citation

  • Bolaji Tunde Matemilola & Ploypailin Kijkasiwat & Chee Yoong Liew, 2025. "The moderating effect of firm age on capital structure choices: evidence from emerging markets," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 52(1), pages 177-199, March.
    • Handle: RePEc:spr:epolin:v:52:y:2025:i:1:d:10.1007_s40812-024-00299-z
    DOI: 10.1007/s40812-024-00299-z
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    Keywords

    Firm age; Emerging markets; Firm characteristics;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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