Capital Structure Decisions under Institutional Factors and Asymmetric Adjustments - Kapitalstrukturbeslutninger med Asymmetriske Justeringer og Institusjonelle Faktorer

Abstract

The first paper compares the symmetric model of capital structure with the asymmetric model. Currently most research on the capital structure speed of adjustment assumes symmetric adjustment. Using a modified partial adjustment model we conclude that there is a significant heterogeneous leverage adjustment, which needs to be considered for capital structure research. The second paper examines the effects institutional factors have on capital structure decisions for firms in European countries. Modern research on capital structure often only includes firm specific determinants in the modeling process. The goal in this study is to determine which specific factors have the most significant effect and how the effects vary across countries. Regressions are performed on a sample of 18 countries from both Western and Eastern Europe, and institutional factors are found to be significant explanatory variables for capital structure.