The Practice of Capital Structure Choice in the Czech Republic: a Comparative Study Based on the Global Data
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Date
2017
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Centre of Sociological Research, NGO
Abstract
The aim of this contribution is to reveal the general practice in corporate
financing in the Czech Republic, capital structure choice in particular, by means
of comparison with the global data. The comparative study is based on primary
data from the Czech Republic obtained via a questionnaire survey, and
comparison with the data from various countries in Europe and America
published in empirical surveys since 2001. The crux of this comparison is the use
of the same questions that were used by Graham and Harvey for the first time in
2001. Unlike the original study, which examined several aspects of corporate
finance in a single country, this study is focused on the cross-country
comparisons of views on determinants of capital structure. The study revealed
both differences and similarities between Czech, American and European
companies. As the most important factor affecting the choice of the appropriate
amount of debt for Czech respondents was “Financial flexibility”, likewise in the
other countries. Surprisingly, the tax advantages are not considered to be of a
high importance to Czech firms and a striking proportion of respondents have
no target debt ratio; such results weren’t found by any previous study.
Description
Subject(s)
Capital structure, Corporate finance, Cross-country comparison, Debt, Equity
Citation
ISSN
2071-8330