How Firm Characteristics Affect Capital Structure: An International Comparison

Posted: 20 Dec 1998

See all articles by John K. Wald

John K. Wald

University of Texas at San Antonio

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Abstract

This empirical study examines the determinants of firms' capital structures in the U.S. and four other countries. A number of theories are tested against these empirical results. Comparing capital decision factors across countries, many differences appear in the correlation between debt/asset ratios and the firms' riskiness, profitability, size and growth. These correlations can be explained by differences in tax policies and agency problems, including differences in bankruptcy costs, information asymmetries and shareholder/creditor conflicts. The study attempts to link these agency problems to legal and institutional differences across countries.

JEL Classification: G32

Suggested Citation

Wald, John K., How Firm Characteristics Affect Capital Structure: An International Comparison. Available at SSRN: https://ssrn.com/abstract=6763

John K. Wald (Contact Author)

University of Texas at San Antonio ( email )

1 UTSA Circle
San Antonio, TX 78249
United States
210-458-6324 (Phone)

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