The determinants of capital structure: Evidence from Sweden

This paper investigates the predictions on capital structure made by the static trade-off theory and the pecking order theory in a Swedish context, from 2009-2013. Hypotheses were derived from both theories and have been tested using an ordinary least squire regression model. The empirical results show that the firm-level determinants profitability, tangibility, growth opportunities, size and liquidity play a significant role in determining the capital structure of Swedish stock listed firms. The results furthermore show that the static trade-off theory has the most explanatory power for the capital structure of Swedish stock listed firms.