Determinants of Capital Structure: Empirical Evidence from US Firm Panel Data

Capital structure is the resources which firms applied to invest new projects or assets as well as normal operations and firms’ capital structure is mainly composed by debt and equity. However, the factors which incentive firms to adjust their financing behaviors are ambiguous after plenty of theoretical explanations and empirical studies over several decades. And the two debatable representative theories are the tradeoff theory and the pecking order theory. This paper mainly intends to investigate the determinants of the US firms’ capital structure through testing the panel data of common stock listed firms from 2006 to 2015. And then this paper also aims to compare the determinants of unregulated and regulated firms’ capital structures. Furthermore, according to previous empirical researches, the variables of firm characteristics employed for this paper are profitability, tangibility, firm size, growth opportunity, non-debt tax shields and volatility. Moreover, three different leverage measures are employed in this paper as the dependent variables. \n \nAccording to the result, the coefficients of tangibility, growth opportunity and non-debt tax shields show the most significance level than other variables and the independent variables are more significant and powerful when the dependent variables are short-term debt ratio and total debt ratio. And the firms’ profitability is negatively correlated to short-term and total debt ratios; there exists inverse relation between tangibility and shorter-term and total debt ratios; large firms would prefer issue more debts; firms with more growth opportunities would increase their short-term and total debt ratios; there exists positive relation between firms’ non-debts tax shields and leverage levels and the firms’ volatility is inversely correlated firms’ long-term debt ratio. And there are some differences of determinants of capital structures between unregulated and regulated firms.