Impact of Ownership Structure on Debt Equity Ratio: A Static and a Dynamic Analytical Framework
Year: 2013
Type: article
Abstract: This study examines the determinants of capital structure as part of the agency theory. French corporate structure with its high corporate concentration provides able us to analyze how ownership structure affects debt policy. Emphasis is placed on the role of insiders and outsiders ownership in explaining the debt ratio. The empirical study examined a sample of French companies listed on SBF 250 index and observed over the period 1997-2007. Test results show a non linear relationship between managerial ownership and capital structure. Outside shareholdings do not play a disciplinary role to effectively control the behavior of managers in a static framework. However, for high levels of managerial ownership, outside shareholdings does not significantly affect debt ratio. In addition, in a dynamic framework, we document a negative and a significant effect of external investors on debt equity ratio. Furthermore, the effect of management ownership is not significant.
Source: International Business Research
DOI: 10.5539/ibr.v6n6p162
Author: Hatem Ben Said
Institution: University of Gabès
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2093383493