Empirical Capital Structure Research: New Ideas, Recent Evidence, andMethodological Issues

Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firmschoose their capital structure remains unclear. This survey paper aims at summarizing anddiscussing 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 discussionis set on studies taking on the key idea to differentiate between competing theories by testingfor firm adjustment behavior following shocks to their capital structure. In addition, wediscuss empirical studies examining additional factors that may influence capital structuredecisions, but have gained only recently attention in the literature (like corporate ratings orirrational managers)....