The Relative Importance of Industry and Size Effect in Corporate Capital Structure Empirical Evidence from the EU Countries

This article aims to evaluate the relative importance of the industry-specific factors and the size-specific factors in relation to their impact on the corporate capital structure in certain countries of the European Union. The first, theoretical part of the study provides a literature review on the industry and the size as capital structure determinants. The following empirical research includes 9 EU countries, where the importance of the two factors is compared both for the aggregated data, as well as in individual countries separately. The source of the data is the BACH-ESD database. The applied methodology involves the analysis of variance and cluster analysis. The contribution of this paper is two-fold. First, it prioritizes the two factors in question, whereas most of the hitherto studies only identify the significance of various determinants of leverage. The second contribution is that this study is based on non-public firms – unlike the majority of studies which verify the capital structure theories using mainly samples of large listed companies.