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The impact of macroeconomic variables on capital structure: A comparison between companies in E7 and G7 countries

Tomschik, Damian (2015) The impact of macroeconomic variables on capital structure: A comparison between companies in E7 and G7 countries.

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Abstract:Although capital structure determinants have been the main focus of many research papers, it would appear that the ‘capital structure puzzle’ has yet to be solved. Hence, this study would like to contribute to this subject by conducting a longitudinal study of companies in E7 and G7 countries over the period 2005-2014. Especially, multivariate regression models are used to examine the direct impact of macroeconomic variables on the capital structure choice of publicly traded non-financial companies. Evidence has been found that there are similarities and differences across E7 and G7 countries with respect to the impact of macroeconomic variables on capital structure. In particular when comparing the E7 with the G7 countries, macroeconomic variables such as the real GDP growth rate, corporate tax rate, bond market development, financial freedom and law enforcement show similar relationships to leverage – characterised as long-term book and market debt – while the inflation rate, stock market development, bank concentration, creditor protection and perceived level of corruption state divergent relationships across the countries. Overall, these findings partly support earlier research outcomes but also indicate new types of relationships within emerging and developed countries.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:https://purl.utwente.nl/essays/67363
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