Title
Were modern capital structure theories valid before World War I? Were modern capital structure theories valid before World War I?
Author
Faculty/Department
Faculty of Applied Economics
Publication type
report
Publication
Antwerp :UA, [*]
Source (series)
Research paper / UA, Faculty of Applied Economics , 2007:24
Volume/pages
45 p.,
Carrier
E
Target language
English (eng)
Affiliation
University of Antwerp
Abstract
This study investigates whether capital structure theory can explain debt ratios in an historical environment which was characterized by poor investor protection, booming stock markets and strong banks, and in which corporate income tax did not affect capital structure. Our results, based on a unique, hand-collected sample of 556 firm-year observations for 129 listed companies in pre-World War I Belgium, are remarkably similar to findings for present-day samples. Leverage was positively related to asset tangibility, firm size and firm age, and it was negatively related to profitability and prior stock returns. Bank relationships were associated with lower leverage.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/3aa832/be7e995e.pdf
Handle