Journal
EUROPEAN FINANCIAL MANAGEMENT
Volume 11, Issue 1, Pages 51-69Publisher
WILEY
DOI: 10.1111/j.1354-7798.2005.00275.x
Keywords
capital structure; dynamic panel data; trade-off theory; pecking order theory
Categories
Ask authors/readers for more resources
In this paper, we analyse the determinants of the capital structure for a panel of 104 Swiss companies listed in the Swiss stock exchange. Dynamic tests are performed for the period 1991-2000. It is found that the size of companies and the importance of tangible assets are positively related to leverage, while growth and profitability are negatively associated with leverage. The sign of these relations suggest that both the pecking order and trade-off theories are at work in explaining the capital structure of Swiss companies, although more evidence exists to validate the latter theory. Our analysis also shows that Swiss firms adjust toward a target debt ratio, but the adjustment process is much slower than in most other countries. It is argued that reasons for this can be found in the institutional context.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available