What factors are economically important in the capital structure decision of European firms?

Dennis Olson and Jan Bartholdy

Applied Economics Letters, 2025, vol. 32, issue 9, 1326-1329

Abstract: Several factors previously identified in the finance literature are statistically significant in determining the long-term debt ratio of European firms. However, only age, size, current assets, and tangible assets have a meaningful economic impact. Tangible assets and firm size play a role in tradeoff theory and age is mentioned in pecking order theory, but our results provide only moderate support for these two theories of capital structure.

Date: 2025
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DOI: 10.1080/13504851.2024.2302910

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