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The Impact of Ownership Structure On Corporate Debt Policy: a Time‐Series Cross‐Sectional Analysis
Author(s) -
Moh'd Mahmoud A.,
Perry Larry G.,
Rimbey James N.
Publication year - 1998
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1998.tb01384.x
Subject(s) - capital structure , agency cost , equity (law) , debt , business , equity capital markets , distribution (mathematics) , cost of capital , monetary economics , economics , finance , private equity , corporate governance , microeconomics , shareholder , profit (economics) , mathematical analysis , mathematics , political science , law
This study examines the influence of agency costs and ownership concentration on the capital structure of the firm. Of particular interest is the composition of equity ownership as a determinant of overall capital structure and the dynamic adjustment of capital structure to changes in the equity ownership. Results indicate that the distribution of equity ownership is important in explaining overall capital structure and that managers do reduce the level of debt as their own wealth is increasingly tied to the firm. It is also noted that the time‐series component is important in resolving the conflicting results reported in prior research.