Empirical Capital Structure Research: New Ideas, Recent Evidence, and Methodological Issues

Ralf Elsas and David Florysiak

Discussion Papers in Business Administration from University of Munich, Munich School of Management

Abstract: Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firms choose their capital structure remains unclear. This survey paper aims at summarizing and discussing corresponding recent developments in empirical capital structure research, which, in our view, are promising for future research. We first present some “stylized facts” on capital structure issues. The focus of the discussion is set on studies taking on the key idea to differentiate between competing theories by testing for firm adjustment behavior following shocks to their capital structure. In addition, we discuss empirical studies examining additional factors that may influence capital structure decisions, but have gained only recently attention in the literature (like corporate ratings or irrational managers). Since some of the available contradictory evidence on capital structure issues might be explained by econometric challenges due to the typical data structure, we also discuss methodological issues like panel data, endogeneity, and partial adjustment models in the capital structure context. Finally, we illustrate the methodological and empirical aspects discussed in this survey by providing corresponding evidence for exchange-listed German companies in the period 1987-2006.

Keywords: Corporate finance; capital structure determinants; dynamic adjustment models (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-acc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://epub.ub.uni-muenchen.de/4743/2/elsas_florysiak_cs.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:msmdpa:4743

Access Statistics for this paper

More papers in Discussion Papers in Business Administration from University of Munich, Munich School of Management Ludwigstr. 28,80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Mareike Seifried ( this e-mail address is bad, please contact ).