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.
Item Type: | Paper |
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Form of publication: | Submitted Version |
Keywords: | Corporate finance, capital structure determinants, dynamic adjustment models |
Faculties: | Munich School of Management > Discussion Papers Munich School of Management > Discussion Papers > Finance & Banking Munich School of Management > Institute for Finance and Banking |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | G32 |
URN: | urn:nbn:de:bvb:19-epub-4743-7 |
Language: | English |
Item ID: | 4743 |
Date Deposited: | 07. Aug 2008, 09:42 |
Last Modified: | 06. Jun 2023, 11:40 |
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