What Do We Know About Capital Structure? Some Evidence from International Data
NBER Working Paper No. 4875
We investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries. At an aggregate level, firm leverage is fairly similar across the G-7 countries. We find that factors identified by previous studies as important in determining the cross- section of capital structure in the U.S. affect firm leverage in other countries as well. However, a deeper examination of the U.S. and foreign evidence suggests that the theoretical underpinnings of the observed correlations are still largely unresolved.
Published: Journal of Finance, December 1995, Vol. 50, No. 5, pp. 1421-1460