Work

An International Comparison of Capital Structure and Debt Maturity Choices

Year: 2010

Type: article

Abstract: This study examines how the institutional environment influences capital structure and debt maturity choices of firms in 39 developed and developing countries. We find that a country’s legal and tax system, corruption, and the preferences of capital suppliers explain a significant portion of the variation in leverage and debt maturity ratios. Specifically, firms in more corrupt countries and those with weaker laws tend to use more debt, especially short-term debt; explicit bankruptcy codes and deposit insurance are associated with higher leverage and more long-term debt. More debt is used in countries where there is a greater tax gain from leverage.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s0022109011000597

Authors: Joseph P. H. Fan, Sheridan Titman, Garry Twite

Institutions: Chinese University of Hong Kong, The University of Texas at Austin, Australian National University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: bronze

Funders: University of Queensland, Chinese University of Hong Kong, Australian Research Council