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Transaction Costs and Capital-Structure Decisions: Evidence from International Comparisons
Yufei Li1; Lewis Tam2
2011
Source PublicationSSRN Electronic Journal
ISSN1556-5068
Abstract

This study examines the effect of transaction costs and information asymmetry on firms’ capital-structure decisions in 40 countries. The findings indicate that transaction costs affect both capital-market timing and capital-structure rebalancing. Past market-timing activity has a significantly negative impact on the current debt ratio, and this impact is stronger for firms facing lower transaction costs of external financing, as defined by legal origin, capital-market development, and securities rules in their home countries. Further analysis indicates that firms in countries with lower transaction costs also rebalance their capital structure more quickly after a deviation from the target, but the rebalancing does not eliminate the market-timing effect on capital structure completely.

KeywordCapital Structure Transaction Cost Capital Market Development Market Timing Rebalance Speed
DOI10.2139/ssrn.2123491
Language英语
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Document TypeJournal article
CollectionFaculty of Business Administration
DEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Affiliation1.affiliation not provided to SSRN
2.Faculty of Business Administration, University of Macau
Recommended Citation
GB/T 7714
Yufei Li,Lewis Tam. Transaction Costs and Capital-Structure Decisions: Evidence from International Comparisons[J]. SSRN Electronic Journal,2011.
APA Yufei Li,&Lewis Tam.(2011).Transaction Costs and Capital-Structure Decisions: Evidence from International Comparisons.SSRN Electronic Journal.
MLA Yufei Li,et al."Transaction Costs and Capital-Structure Decisions: Evidence from International Comparisons".SSRN Electronic Journal (2011).
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