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Capital Structure: New Evidence from the Ownership Structure *
Author(s) -
PINDADO JULIO,
DE LA TORRE CHABELA
Publication year - 2011
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/j.1468-2443.2010.01115.x
Subject(s) - capital structure , expropriation , empirical evidence , business , incentive , debt , perspective (graphical) , control (management) , capital (architecture) , accounting , microeconomics , monetary economics , finance , economics , market economy , management , philosophy , epistemology , archaeology , artificial intelligence , computer science , history
This paper provides theory and empirical evidence supporting a complementary perspective on capital structure based on corporate ownership structure. According to our ownership view, capital structure is partly determined by the incentives and the goals of those who are in control of the firm. Our results strongly support this view. As a consequence of managerial entrenchment and rent expropriation phenomena, self‐interested agents (entrenched managers and controlling owners) chose the capital structure most appropriate for their own best interest. Additionally, we find evidence of an interaction effect between managerial ownership and ownership concentration, in particular, the larger debt increments promoted by outside owners when managers are entrenched.