Article,
What factors are economically important in the capital structure decision of European firms?
Affiliations
- [1] Aarhus University [NORA names: AU Aarhus University; University; Denmark; Europe, EU; Nordic; OECD]
Abstract
Several factors previously identified in the finance literature are statistically significant in determining the long-term debt ratio of European firms. However, only age, size, current assets, and tangible assets have a meaningful economic impact. Tangible assets and firm size play a role in tradeoff theory and age is mentioned in pecking order theory, but our results provide only moderate support for these two theories of capital structure.
Keywords
Capital structure,
economic importance,
pecking order theory,
tradeoff theory