The relationship between supply factor and firm's capital structure : a US study

Abstract

The past work which has studied the impact of the factors of the firm’s capital structure has always focused on the demand side. That is to maximize the firm’s value through different capital structures, industries’ bankruptcy costs and the tax shield. Several theories have been developed through these efforts, such as Trade-off and Pecking Order Theories. Since the financial crisis in the second half of 2007, issues over the supply of credit have gained attention, so increasingly scholars are now taking supply factors such as the impact of access to public bond markets into account. In this way, this paper will discuss the relationship between the supply factors and firms’ capital structure.