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The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions

Journal of financial and quantitative analysis, 2008-03, Vol.43 (1), p.59-92 [Peer Reviewed Journal]

Copyright © School of Business Administration, University of Washington 2008 ;Copyright 2008 Michael G. Foster School of Business ;Copyright University of Washington, School of Business Administration Mar 2008 ;ISSN: 0022-1090 ;EISSN: 1756-6916 ;DOI: 10.1017/S0022109000002751 ;CODEN: JFQAAC

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Title:
The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions
Author: Antoniou, Antonios ; Guney, Yilmaz ; Paudyal, Krishna
Subjects: Bank capital ; Bank loans ; Banking system ; Business structures ; Capital management ; Capital market ; Capital markets ; Capital structure ; Coefficients ; Companies ; Corporate governance ; Dividends ; Economics ; Enterprises ; Equity ; Europe ; Financial economics ; Financial leverage ; Financial services ; Financial systems ; Financing methods ; Generalized method of moments ; Leverage ; Market economies ; Panel data ; Private sector ; Profitability ; Studies ; U.S.A
Is Part Of: Journal of financial and quantitative analysis, 2008-03, Vol.43 (1), p.59-92
Description: The paper investigates how firms operating in capital market-oriented economies (the U.K. and the U.S.) and bank-oriented economies (France, Germany, and Japan) determine their capital structure. Using panel data and a two-step system-GMM procedure, the paper finds that the leverage ratio is positively affected by the tangibility of assets and the size of the firm, but declines with an increase in firm profitability, growth opportunities, and share price performance in both types of economies. The leverage ratio is also affected by the market conditions in which the firm operates. The degree and effectiveness of these determinants are dependent on the country's legal and financial traditions. The results also confirm that firms have target leverage ratioswith French firms being the fastest in adjusting their capital structure toward their target level and Japanese firms the slowest. Overall, the capital structure of a firm is heavily influenced by the economic environment and its institutions, corporate governance practices, tax systems, the borrower-lender relation, exposure to capital markets, and the level of investor protection in the country in which the firm operates.
Publisher: New York, USA: Cambridge University Press
Language: English
Identifier: ISSN: 0022-1090
EISSN: 1756-6916
DOI: 10.1017/S0022109000002751
CODEN: JFQAAC
Source: AUTh Library subscriptions: ProQuest Central
Alma/SFX Local Collection

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The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions

Copyright © School of Business Administration, University of Washington 2008 ;Copyright 2008 Michael G. Foster School of Business ;Copyright University of Washington, School of Business Administration Mar 2008 ;ISSN: 0022-1090 ;EISSN: 1756-6916 ;DOI: 10.1017/S0022109000002751 ;CODEN: JFQAAC

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