Empirical Capital Structure: A Review

By Christopher A. Parsons, Sheridan Titman. Foundations and Trends® in Finance, 2009

195 citations recorded by the source corpus.

This survey provides a synthesis of the empirical capital structure literature. Our synthesis is divided into three parts. The first part examines the evidence that relates to the cross-sectional determinants of capital structure. This literature identifies and discusses the characteristics of firms that tend to be associated with different debt ratios. In the second part, we review the literature that examines changes in capital structure. The papers in this literature explore factors that move firms away from their target capital structures as well as the extent to which future financing choices move firms back toward their targets. Finally, we complete our review with a set of studies that explore the consequences of leverage, rather than its determinants. These studies are concerned with feedback from financing to real decisions. For example, we explore how a firm’s financing choices influences its incentive to invest in its workers, price its products, form relationships with suppliers, or compete aggressively with competitors.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/16837778238dcb06c63f3c5f5c3b9fe84a51b85b

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Citations in the corpus

Financial Decision Making in Family Firms (2014, result): “Last, we contribute to the theory of the family firm and complement recent research on family firm financing (e.g., King & Santor, 2008; Parsons & Titman, 2008) by showing that noneconomic variables can influence financing behavior.”
Intangible assets and capital structure (2020, unknown): “One reason is that many tangible assets constitute suitable collateral (Harris and Raviv 1991; Frank and Goyal 2008; Parsons and Titman 2009) because they can more easily be redeployed at relatively low transaction costs when the borrower”
Human Capital, Capital Structure, and Employee Pay: An Empirical Analysis (2013, background): “16 The review article by Parsons and Titman (2008) has a detailed”
Corporate Deleveraging and Financial Flexibility (2018, unknown): “Rows 1 to 6 have traditional leverage determinants as in Rajan and Zingales (1995) and Frank and Goyal (2009), with all variables evaluated at the trough after peak ML.”