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Capital Structure in Emerging Asia

Author

Listed:
  • Vidhan K. Goyal

    (Department of Finance, The Hong Kong University of Science and Technology)

  • Frank Packer

    (Bank for International Settlements, Representative Office for Asia and the Pacific, Hong Kong)

Abstract

This paper examines the capital structure and financing decisions of firms in emerging Asia between 1991-2014. Neither the mean/median leverage nor the upper tails of the leverage distribution show any upward shift in recent years. On the whole, corporate leverage appears quite stable. The legal environment and quality of a country's institutions are important influences on corporate leverage decisions: firm characteristics such as asset tangibility and size that help to overcome information asymmetries are less important in countries with stronger institutions. During periods of expansive global monetary policy, firms in countries with stronger institutions raise more debt financing and invest more than other firms.

Suggested Citation

  • Vidhan K. Goyal & Frank Packer, 2017. "Capital Structure in Emerging Asia," HKUST IEMS Working Paper Series 2017-48, HKUST Institute for Emerging Market Studies, revised Dec 2017.
    • Handle: RePEc:hku:wpaper:201748
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    File URL: https://iems.ust.hk/assets/publications/working-papers-2017/iemswp2017-48_new.pdf
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    References listed on IDEAS

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    Cited by:

    1. Quratulain Zafar & Winai Wongsurawat & David Camino, 2019. "The determinants of leverage decisions: Evidence from Asian emerging markets," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1598836-159, January.

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