This paper, instead of focusing on agency cost, analyzes the role of risk-sharing under problems of enforceability (default) to explain the optimal determination of capital structure. Optimal contract structure presents equity and debt.

This paper analyses company’s capital structure using a sample of listed companies on a ten year period. It mainly tackles one of the most debated issues in corporate finance, the relationship between profitability and debt level of a company. Shareholder funds are considered at book value,...

firms is developed in this paper and results compared with the classical static model. This paper specifies and estimates the unobservable optimal capital structure using a wide range of observable determinants. Uunbalanced panel data of Korean listed firms for the period 1985 to 2002 is used in...

This paper incorporates the cost of adjustment between observed and optimal leverage in explaining the variation in firm?s equity or bank-debt financing investments. Using a dynamic adjustment approach identifies the determinants to capital structure between different financial systems. In...

The importance of capital structure is explored by comparing existing archetypes of financial systems through a new methodological application. Differences in firms’ cost of capital show that capital structure is relevant in R&D and other investment decisions. The conclusions are that 1) there...

The common approach in empirical capital structure research has been to study the determinants of optimal leverage by studying the association between observed leverage and a set of explanatory variables. This approach has two major shortcomings. First, the observed leverage need not necessarily...

This article provides evidence about the determinants of capital structure in developing countries through studying non-financial Jordanian firms. We detect that capital structure choice in Jordan is influenced by similar set of factors suggested in the developed markets, namely, institutional...

Several studies make evidence that market timing becomes the factor that shapes financing policies. However, debt market timing still less developed compared to equity market timing. This paper investigates the relevance of market timing considerations on the debt issuance using a panel of 30...

We use a dynamic adjustment model and panel methodology to investigatethe determinants of a time- varying optimal capital structure. Because firmsmay temporarily deviate from their optimal capital structure in the presenceof adjustment costs, we also endogenize the adjustment process. In partic...

We use a dynamic framework and panel methodology to investigate the determinants of a time-varying corporate capital structure. Our sample comprises 706 European firms from France, Germany, Italy and the U.K. over the period from 1983 to 2002. If capital structure adjustment is costly, firms may...