Determinants of Capital Structure : An Expanded Assessment

Using a standardized methodology, we empirically evaluate 56 determinants of capital structure proposed in the literature in terms of economic significance, statistical significance, identification, and intertemporal stability. We organize the determinants into a framework in which each proposed determinant represents a constraint on shareholder value maximization in interactions with specific related parties. We find that truly robust and economically important determinants of debt ratios are relatively few in number. However, the evidence as a whole shows that the strongest determinants are those related to shareholder interactions with prospective equityholders and debtholders