Hierarchical determinants of capital structure

Eduardo K. Kayo and Herbert Kimura

Journal of Banking & Finance, 2011, vol. 35, issue 2, 358-371

Abstract: We analyze the influence of time-, firm-, industry- and country-level determinants of capital structure. First, we apply hierarchical linear modeling in order to assess the relative importance of those levels. We find that time and firm levels explain 78% of firm leverage. Second, we include random intercepts and random coefficients in order to analyze the direct and indirect influences of firm/industry/country characteristics on firm leverage. We document several important indirect influences of variables at industry and country-levels on firm determinants of leverage, as well as several structural differences in the financial behavior between firms of developed and emerging countries.

Keywords: Capital; structure; Hierarchical; analysis; Firm-level; determinants; Industry-level; determinants; Country-level; determinants (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (128)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:35:y:2011:i:2:p:358-371

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