Capital Structure Dynamics in Private Business Groups
Year: 2009
Type: preprint
Abstract: Dynamic models of capital structure assume that companies trade-off the advantages of a leverage adjustment and its costs. In general, private companies are assumed to face large adjustment costs, and should have lower financing flexibility. However, we argue that an important class of private companies – business group affiliates – may face relatively low adjustment costs because of their access to both internal and external capital markets. Our empirical results show significant differences in the composition of the capital structure and the leverage adjustment process between affiliates of private Belgian business groups and comparable stand-alone companies.
Authors: Nico Dewaelheyns, Cynthia Van Hulle
Institution: KU Leuven
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2119311457