Download This PaperThe Capital Structure Difference Across Australian Companies
International Journal of the Economics of Business, Vol. 17, No. 3, pp. 277-287, 2010
19 Pages Posted: 5 Mar 2012
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The Capital Structure Difference Across Australian Companies
Date Written: October 15, 2009
Abstract
This study investigate the relation between capital structure and firm characteristics in Australia. We use panel data regression to study an unbalanced panel of 367 firms over a 15-year period from 1992 to 2006. We find that debt-asset ratio is positively related to asset tangibility but inversely related to growth prospects and business risk measured by unlevered beta of equity. We also find that although levered firms are generally more profitable than unlevered, profitability decreases the debt ratio of levered firms. We do not find that firm size affects the capital structure of Australian firms. These results are consistent with the pecking order and the agency cost theories but contradict the tradeoff theory.
JEL Classification: G32
Suggested Citation: Suggested Citation
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