TY - JOUR AU - Sharif, Meskat Ibne PY - 2019/10/24 Y2 - 2024/03/29 TI - Fundamental Drivers of Capital Structure: Evidence from Publicly Traded Non-financial U.S. Firms JF - International Journal of Economics and Financial Issues JA - IJEFI VL - 9 IS - 6 SE - Articles DO - UR - https://www.econjournals.com/index.php/ijefi/article/view/8663 SP - 113-122 AB - <p>This paper investigates the influence of relevant factors in determining capital structure with their respective extent. Excluding financial firms, all publicly traded American firms for the period of 1950-2005 are considered as the sample firms. Five fundamental factors that may explain leverage are growth opportunities, tangible assets, firm profit, firm size, and inflation. I use simple linear regression, BIC, and AIC, to identify the reliably consistent influential factors and a model. Using total leverage to market value of asset (TLMA) as my main model for the entire estimation period (1950-2005), I find that tangibility and firm size are significantly and positively related to leverage. The growth opportunities is also positively related to leverage but statistically insignificant. But firm profit has a significant negative relationship with leverage confirming the implication of the pecking order hypothesis.</p><p><strong>Keywords:</strong> static trade-off theory, pecking order theory, market timing theory, signaling theory, agency cost theory</p><p><strong>JEL Classifications:</strong> G1, G3, G10, G20, G32</p><p>DOI: <a href="https://doi.org/10.32479/ijefi.8663">https://doi.org/10.32479/ijefi.8663</a></p> ER -