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Firm- and country-level determinants of corporate leverage: Some new international evidence

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  • Gungoraydinoglu, Ali
  • Öztekin, Özde

Abstract

This research analyzes the determinants of capital structure across 37 countries. Institutional arrangements matter for capital structure decisions; however, firm-level covariates drive two-thirds of the variation in capital structure across countries, while the country-level covariates explain the remaining one-third. The observed relationships between the country-level determinants and leverage provide strong support to the predictions of both the trade-off and the pecking-order theories. Country-level determinants serve as substitute mechanisms for the firm-level, industry-level, and macroeconomic determinants by moderating their marginal impact on leverage.

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  • Gungoraydinoglu, Ali & Öztekin, Özde, 2011. "Firm- and country-level determinants of corporate leverage: Some new international evidence," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1457-1474.
    • Handle: RePEc:eee:corfin:v:17:y:2011:i:5:p:1457-1474
    DOI: 10.1016/j.jcorpfin.2011.08.004
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    More about this item

    Keywords

    Dynamic capital structure; International; Institutions; Trade-off; Pecking-order;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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