Examination of capital structure decisions: evidence from UK listed firms

Fan, Jiahui (2010) Examination of capital structure decisions: evidence from UK listed firms. [Dissertation (University of Nottingham only)] (Unpublished)

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In this paper, we attempt to analyses the determinants of capital structure in the UK. Besides, we also examine the empirical results compared with the implication of past capital structure theories and research. The panel data model with a sample of 100 non-financial listed firms in the United Kingdom between 1999 and 2008 is conducted to test the hypotheses. We use proxy variables that suggested by past literatures to explain capital structure decisions of the UK firms.

Profitability and growth are estimated to be natively related to debt ratios but the explanatory power of growth is limited. Asset tangibility and firm size both have a strongly positive relationship with the leverage. Again, both determinants will have opposite results when the leverage is measured by short-term debt. Similarly, earning volatility is also positively related to debt ratios with a very significant level. However, it is estimated that the effect of non-debt tax shields and inflation on capital structure is not significant, whereas inflation is only significant when using market value. In addition, it seems that the trade-off theory is more applicable to explain capital structure in the UK.

Item Type: Dissertation (University of Nottingham only)
Keywords: capital structure
Depositing User: EP, Services
Date Deposited: 18 Jan 2011 16:03
Last Modified: 15 May 2016 17:18
URI: http://eprints.nottingham.ac.uk/id/eprint/23963

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