A new approach to explaining capital structure

Abstract

[EN] This document provides a new approach that is based on the ownership structure to explain the capital structure. Our opinion is that the capital structure is determined in part by the incentives and goals of those in control of the company. Our results strongly support this view. As a consequence of the phenomena of managerial entrenchment and expropriation of rents, the interested agents (entrenched administrators and controlling owners) choose the capital structure of according to the most appropriate indebtedness ratios for their own interests. In addition, we find evidence of an interaction effect between the internal property and the ownership concentration; in particular, increases in debt promoted by external owners are greater when managers are entrenched. results are obtained based on company-specific characteristics, such as intangible assets, investment opportunities, and free cash flow