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What Do We Know About Capital Structure? Some Evidence from International Data

  • Raghuram G. Rajan
  • Luigi Zingales

We investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries. At an aggregate level, firm leverage is fairly similar across the G-7 countries. We find that factors identified by previous studies as important in determining the cross- section of capital structure in the U.S. affect firm leverage in other countries as well. However, a deeper examination of the U.S. and foreign evidence suggests that the theoretical underpinnings of the observed correlations are still largely unresolved.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4875.

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Date of creation: Oct 1994
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Publication status: published as Journal of Finance, December 1995, Vol. 50, No. 5, pp. 1421-1460
Handle: RePEc:nbr:nberwo:4875
Note: CF
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