The Determinants of Capital Structure Choice
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In this paper, the explanatory power of some of the recent theories of optimal capital structure is analyzed empirically and a factor-analytic technique is used to mitigate the measurement problems encountered when working with proxy variables.Abstract:
This paper analyzes the explanatory power of some of the recent theories of optimal capital structure. The study extends empirical work on capital structure theory in three ways. First, it examines a much broader set of capital structure theories, many of which have not previously been analyzed empirically. Second, since the theories have different empirical implications in regard to different types of debt instruments, the authors analyze measures of short-term, long-term, and convertible debt rather than an aggregate measure of total debt. Third, the study uses a factor-analytic technique that mitigates the measurement problems encountered when working with proxy variables.read more
Citations
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The capital structure of multinational corporations: Canadian versus U.S. evidence☆
Usha R. Mittoo,Zhou Zhang +1 more
TL;DR: The authors showed that Canadian multinational corporations display higher leverage than domestic firms (DCs) due to lower agency costs of debt associated with MNCs' U.S. operations, and they also found that the Canadian firms with international bond market access have higher leverage compared with firms without such access.
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A comparison of neural network and multiple regression analysis in modeling capital structure
TL;DR: Results of this study show that the determinants of capital structure are different in both industries, and it seems that the relationships between debt ratio and independent variables are not linear.
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Determinants of capital structure choice and empirics on leverage behavior: a comparative analysis of hotel and manufacturing firms.
TL;DR: In this paper, a cross-sectional regression analysis of the leverage behavior of 33 firms in two industry groups (the hotel industry and the manufacturing sector) was examined, finding that all leverage determinants studied, excepting firm size, are significant in explaining leverage variations in debt behavior.
Determinants of Capital Structure Evidence from Libya
Abstract: This paper provides further evidence of the capital structure theories pertaining to a developing country and examines the impact of the lack of a secondary capital market by analysing a capital structure question with reference to the Libyan business environment. The results of cross-sectional OLS regression show that both the static trade-off theory and the agency cost theory are pertinent theories to the Libyan companies’ capital structure whereas there was little evidence to support the asymmetric information theory. The lack of a secondary market may have an impact on agency costs, as shareholders who are unable to offload their shares might exert pressure on management to act in their best interests.
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Capital structure with risky foreign investment.
TL;DR: In this article, the authors investigate the effect of foreign political risks on leverage of multinational firms and find that firms in industries whose returns are most susceptible to political influence reduce their leverage.
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