We analyze the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. Our analysis yields two new results. First, we find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of firm-specific factors. Second, although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage.

Additional Metadata
Keywords Capital structure, country-specific factors, firm-specific factors, international evidence, leverage
JEL Corporate Finance and Governance (jel G3), Corporate Finance and Governance: General (jel G30), Business Administration and Business Economics; Marketing; Accounting (jel M)
Publisher Erasmus Research Institute of Management (ERIM)
Persistent URL hdl.handle.net/1765/10517
de Jong, A, Kabir, R, & Nguyen, T.T. (2007). Capital Structure around the World: The Roles of Firm- and Country-Specific Determinants (No. ERS-2007-058-F&A). ERIM report series research in management Erasmus Research Institute of Management. Erasmus Research Institute of Management (ERIM). Retrieved from http://hdl.handle.net/1765/10517