Determinants of Corporate Capital Structure: Evidence from Non-financial Listed French Firms

Ana Margarida Fernandes Afonso Correia (), António Melo Cerqueira () and Elísio Brandão ()
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Ana Margarida Fernandes Afonso Correia: FEP-UP, School of Economics and Management, University of Porto
António Melo Cerqueira: FEP-UP, School of Economics and Management, University of Porto
Elísio Brandão: FEP-UP, School of Economics and Management, University of Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper analyses firms’ characteristics that influence managers’ decisions about how to finance their companies. It also aims to study which financial theory better explains those decisions that affect the capital structure of the firms. Our empirical study uses panel data and OLS estimations with cross-section fixed effects and year dummy variables. The sample includes 436 non-financial listed French firms, over the period from 2007 to 2013 (3052 firm-year observations). In the empirical study to test the results’ sensitivity to the use of debt with different maturities we use two regressions and hence two dependent variables: the total debt and the long term debt. The independent variables that we use are the tangibility of assets, the profitability, the firm size, the growth opportunities and the non-debt tax shields. All independent variables exhibit explanatory power and the results are robust to the use of debt with different maturities. The empirical results show that there is no leading theory in explaining managers’ decisions about how to finance firms. Additionally, the sample was divided into pre-crisis (2007-2008) and crisis (2009-2013) periods, the results show a substantial change of the influence of the tangibility of assets, as a result of the financial crisis.

Keywords: capital structure; trade-off theory; pecking order theory; market timing theory; Euronext Paris (search for similar items in EconPapers)
JEL-codes: C33 G32 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-12
New Economics Papers: this item is included in nep-acc and nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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