An Empirical Analysis Of The Determinants Of Corporate Debt Ownership Structure

I examine the relation between corporate debt ownership structure and several firm characteristics suggested by recent theory. The results demonstrate the importance of monitoring and information costs, the likelihood and costs of inefficient liquidation, and borrowers' incentives in affecting firms' debt source preferences. Several theoretical predictions receive support, while others do not. The results also suggest important differences between bank and private nonbank debt, which contrasts with most theoretical models. Additionally, I find evidence of systematic use of bank debt by firms with access to public debt, suggesting the benefits attributed to bank debt in theoretical models remain important after firms gain access to public debt markets. Although different lenders appear to have different maturity preferences, the results also suggest debt maturity and debt ownership decisions may be separable.

This paper offers a comparative analysis of the determinants of the corporate debt ownership structure in a bank-oriented economy (Germany) and market-oriented economy (the UK). Using GMM estimators, we control for the problems of endogeneity, heteroscedasticity, normality, simultaneity and measurement errors that are common in firm-level panel data. The results show that the firms in both countries adjust their debt ownership structure towards their target levels - British firms being the swiftest. The findings confirm the validity of the liquidation and renegotiation hypothesis and the flotation cost hypothesis in both countries. However, the moral hazard and adverse selection hypothesis receives strong support in the UK but not in Germany. Moreover, the role of control factors (market related variables) in determining the choice of the lender is country dependent. Therefore, the debt ownership structure of a firm is influenced by both the firm-specific factors and the financial systems and corporate governance traditions in which the firm operates.

Determination of Debt / Equity ratio is an important aspect of Financial Management. The present study discusses this aspect in detail. It discusses about the various factors that decide the amount of debt in an organisation. Data relating to long term, short term and total debt along with various factors for large, medium and small capitalisation companies in India have been analyzed. Various research tools like descriptive statistics, correlation anlysis and multiple regression techniques have been used in analysis. The present study will be useful for the Finance Managers in companies. It will also be useful for the researchers who want to carry out research work in this area. The study will also benefit the Management Institutions as it adds to the already existing information in text books on Financial Management.

The purpose of this study is to analyze the determinants of leverage in Turkish corporations. Using data on 48 non-financial ISE (Istanbul Stock Exchange) listed companies for the period 1998-2007, the relationships of leverage with a set of explanatory variables are investigated. In addition to using the ratio of long-term debt to long-term debt plus market value of common stocks as the general leverage measure, we use the ratio of short term-debt to total assets. To investigate the relationships, two panel data equations are formed for each leverage measure. The findings indicate that firm size and collateral value of assets are positively related to leverage, while dividend payout ratio, profitability and CEO duality are negatively related to leverage. On the other hand, firm size and profitability are negatively related to the level of short term-debt, whereas it has positive relations with dividend pay-out ratio and ownership concentration. Collateral value of assets does not seem to be related to the level of short-term debt. 2001 crisis in Turkey seems to have increased short-term financing that year.

The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate "The Changing Role of Debt and Equity in Financing U.S. Capital Formation." The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.

Philipp Jostarndt studies distress-induced changes in ownership and control, success factors in distressed equity infusions, and firms’ choice between in- and out-of-court debt restructurings. In addition, he analyzes the determinants of survival, acquisition, and bankruptcy as alternative paths to exit financial distress. He includes both the firm perspective as well as the market valuations of the undertaken restructurings and, where applicable, relates the findings to the microstructure of Germany’s revised bankruptcy legislation.

The study investigate the relationship between debt ownership structure and various firm specific characteristics suggested by recent theories for an emerging economy, India, which is a unique hybrid of a market-based and a bank-oriented system. Bank debt use, which is also the predominant source of long-term borrowings in India, is negatively related to age, size, volatility of earning growth, leverage and positively related to the fixed asset ratio. These findings are consistent with the theoretical models that argue a positive association between bank debt use and high information and monitoring costs, less likelihood and cost of inefficient liquidation and high incentive to take actions harmful to the lender.