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How Country Affects the Capital Structure Choice: Literature Review and Criticism

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  • Daniela Venanzi

Abstract

Recent international financial research finds that not only firm- and industry-specific determinants, but also country-specific factors influence a firm¡¯s capital structure. The paper¡¯s aim is twofold. Firstly, it proposes a systematic view of the international studies on country effect since 2000, by highlighting both similarities and differences in terms of tested hypotheses, country-level determinants, expected relationships. The main outcome is a complete framework of the country characteristics, which mostly affect the capital structure choice as well as their respective theoretical rationale. Secondly, based on the above review, some areas of potential development in empirical testing will be identified, regarding test design, sample selection, dependent variable measurement, statistical methodology: the paper¡¯s objective is to critically discuss the state of the art in this field, to hopefully improve the empirical testing of country effect on leverage in further research.

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  • Daniela Venanzi, 2017. "How Country Affects the Capital Structure Choice: Literature Review and Criticism," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(4), pages 1-11, April.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:4:p:1-11
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    References listed on IDEAS

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    Cited by:

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    3. Daniela Venanzi & Alessia Naccarato, 2017. "The Capital Structure Choice of European Firms: The Role of Financial System and Institutional Setting," International Business Research, Canadian Center of Science and Education, vol. 10(12), pages 22-47, December.

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    More about this item

    Keywords

    capital structure; country effect; literature review; criticisms on empirical testing;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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