Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 23: Dynamic Optimal Capital Structure and Technical Change

Hans Lööf ()
Additional contact information
Hans Lööf: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: The importance of capital structure is explored by comparing existing archetypes of financial systems through a new methodological application. Differences in firms’ cost of capital show that capital structure is relevant in R&D and other investment decisions. The conclusions are that 1) there are large and also unexpected cross-country differences in determinants to optimal capital structure; 2) observed leverage is often different from target in both equity (or stock market based) and debt (or bank based) dominated systems; 3) faster speed towards the target is observed in the equity based system indicating a higher flexibility.

Keywords: Capital structure; dynamic adjustment; panel data; optimal leverage; financial markets; cross-country comparison; technological change; creative destruction.

JEL-codes: C23; C51; G32; O16; O31

28 pages, December 9, 2004

Note: The paper is published in Structural Change and Economic Dynamics, Vol 15 Issue 14, pages 449-468 (December 2004)

Full text files

cesiswp23.pdf PDF-file 

Download statistics

Published as
Hans Lööf, (2004), 'Dynamic Optimal Capital Structure and Technical Change', Structural Change and Economic Dynamics, vol 15, no 4, pages 449-468

Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-21 12:08:39.