Capital Structure Around the World: The Roles of Firm- and Country-Specific Determinants

Abstract

We analyze the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. Our analysis yields two new results. First, we find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of firm-specific factors. Second, although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage.

Post IPO dynamics of capital structure on the Johannesburg Stock Exchange

“…For instance, Rajan and Zingales (1995) shows a consistent negative correlation between profitability and leverage for firms in seven industrialised economies. Likewise, De Jong et al, (2008) show that profitability is negatively associated with leverage for firms in 25 countries across the developed and developing economies. Similar results are confirmed in Strabulaev (2007) for firms in the US and in Antoniou, Guney and Paudyal (2008) for firms across five industrialised economies.…”

“…These factors have consistently shown to be correlated to leverage. (Rajan & Zingales, 1995;Barclay & Smith, 2005;Huang & Song, 2006;Delcoure, 2007;De Jong, Kabir & Nguyen, 2008).…”

“…However, the evidence regarding the association between size and capital structure is mixed. Dejong Kabir and Nguyen (2008) perform a comprehensive analysis of firm and country specific determinants of capital structure for firms in 42 countries, and they find that size is positively and significantly correlated to leverage in 21 of the 42 countries. This confirms the earlier argument that large firms borrow more due to lower risk associated with stable cash flows.…”

Influência do Excesso de Confiança e Otimismo no Endividamento de Organizações Cinquentenárias e não Cinquentenárias Brasileiras

“…Outros autores (Booth et al, 2001;Terra, 2007;Jong, Kabir & Nguyen, 2008;Bastos et al, 2009;Martins & Terra, 2014) mencionam a relevância de variáveis como: PIB, inflação e variações das ações na bolsa, na estrutura de capital das organizações. Booth et al (2001) e Terra (2007 indicam que as variáveis macroambientais interferem no nível de endividamento de empresas tanto em países desenvolvidos quanto em desenvolvimento.…”

“…Booth et al (2001) e Terra (2007 indicam que as variáveis macroambientais interferem no nível de endividamento de empresas tanto em países desenvolvidos quanto em desenvolvimento. Para Jong et al (2008) empresas de países com melhor estrutura legal e econômica são mais predispostas à alavancagem.…”