What Do We Know about Capital Structure?: Some Evidence from International DataWe 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 correlated in the cross-section with firm leverage in the United States, are similarly correlated 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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adjusted debt asymmetric information bank oriented bond market book leverage book ratio book value capital structure coefficient column companies consolidated balance sheets consolidated firms corporate control Corporate Finance correlated with leverage creditors debt to capital dependent variable determinants of capital different countries dividends EBITDA effect equity issues explanatory variables external financing factors fraction France Italy U.K. G-7 countries Germany Global Vantage growth highly levered income industry institutional differences Interest coverage ratio Italy U.K. Canada Jacob Mincer Japan Journal of Finance large firms Logsale lowest quartile Luigi Zingales market capitalization market for corporate market to book market value measures of leverage median NBER Working Papers negatively correlated Number pension liabilities pre-tax dollar Price Waterhouse quartile Rajan regression relationship reporting consolidated balance retained earnings sample shareholders significant stock market Table VIII Tangibility tax advantaged tax rate total assets U.S. dollars U.S. firms value of adjusted value of assets value of equity