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Capital structure and institutional setting: a decompositional and international analysis

[journal article]

Lopez-Iturriaga, Felix; Rodríguez-Sanz, Juan-Antonio

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-240400

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Abstract The legal and institutional setting is more and more influential in firms’ financial decisions. Our paper analyses firms’ capital structure in an international framework in order to assess the different level of debt use across countries and to identify both common and differential explanatory factors. Although the level of financial leverage is quite different, the factors that have traditionally driven capital structure decisions have much in common in all the legal and institutional settings. The performance and size of the firm, the assets tangibility and the growth opportunities have a relevant but differential effect across the different institutional systems. Consequently, our results suggest that the legal and institutional system of each country does not only affect firms’ capital structure but also creates the conditions to explain a differential effect of the common determinants of firms’ financial choices.
Document language English
Publication Year 2008
Page/Pages p. 1851-1864
Journal Applied Economics, 40 (2008) 14
DOI http://dx.doi.org/10.1080/00036840600905233
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)