Access to Capital and Capital Structure of the Firm

Anastasiya Shamshur

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: The paper examines the importance of financial constraints for firm capital structure decisions in transitions economies during 1996-2006 using endogenous switching regression with unknown sample separation approach. The evidence suggests that differences in financing constraints have a significant effect on a firm's capital structure. Constrained and unconstrained firms differ in capital structure determinants. Specifically, tangibility appears to be an extremely important leverage determinant for constrained firms, while macroeconomic factors (GDP and expected inflation) affect the leverage level of unconstrained firms, suggesting that those firms adjust their capital structure in response to changes in macroeconomic conditions. Moreover, financially unconstrained firms adjust their capital structures faster to the target level, which is consistent with the previous literature.

Keywords: capital structure; financing decisions; credit constraints; Eastern Europe (search for similar items in EconPapers)
JEL-codes: C23 G32 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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