Determinants of corporate capital structure in Taiwan

• Main Author: 徐雍超
• Other Authors: 陳元保
• Format: Others
• Language: en_US
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/89445635252394379400

碩士 === 東吳大學 === 會計學系 === 93 === Abstract Since the proposal of the irrelevance of corporate capital structure theory by Modigliani and Miller in 1958, capital structure starts to play an important role in corporate finance. However, there’s still not a consensus about the determinants of corporate capital structure. In recent years, researchers began to try to take the operating environment conditions into consideration. Combination of the operating environment conditions and firm-specific characteristics is in the trend. There are two agendas in this thesis. First of all, what are the determinants statistically significant to the decision of the capital structure of firms, including operating environment condition factors and firm-specific variables? Second, what action will firms take to change their capital structure, in other words, how can we predict firms’ financing choices (debt versus equity) by the use of operating environment condition factors and firm-specific variables? Different methodologies are applied to deal with the agendas. For agenda one, the fixed effect model is used to estimate the optimal capital structure. Operating environment condition factors are added to the independent variables. Additionally, adoption of two different classifications: the technology hardware and equipment industry and the traditional manufacturing industry is performed to analyze whether the determinants of corporate capital structure in different industries are the same or not. For agenda two, the probit regression model is applied to predict the issue choices between debt and equity. This study derives conclusions that profitability, size of a firm, growth rate, industry effect, nature of assets, tax shield, financial constraints, stock market and operating environment are statistically significant to the corporate capital structure. Profitability, deviations from the target leverage, nature of assets, growth rate, stock market and operating environment have significant influences on the issue choices between debt and equity.