Template-Type: ReDIF-Paper 1.0
Author-Name: Marco Botta
Author-X-Name-First: Marco
Author-X-Name-Last: Botta
Author-Name: Luca Colombo
Author-X-Name-First: Luca 
Author-X-Name-Last: Colombo
Author-Email: lucava.colombo@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore




Title: Macroeconomic and Institutional Determinants of Capital Structure Decisions

Abstract: We investigate the capital structure of a large sample of corporations in 52 countries,
focusing on the effects of macroeconomic and institutional characteristics on firms' dynamic
behavior. We find that these characteristics affect both the optimal level of leverage and
the adjustment process towards it. The speed of adjustment varies significantly with both
macroeconomic and institutional conditions for financially unconstrained firms, while it is
unaffected for constrained firms. Overall, our results support a complex view of capital
structure decisions, where market timing and pecking order arguments affect the short-run,
while dynamic trade-off with costly readjustment matters in the long-run.
Length: 63
Creation-Date: 2016-04
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def038.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: def038
Classification-JEL: C23, E44, G32. 
Keywords: Capital Structure Dynamics, Debt Readjustments, Dynamic Adjustment Models,
Macroeconomic Conditions, Speed of Adjustment.
Handle: RePEc:ctc:serie1:def038