Institutional Characteristics and Capital Structure - A Cross-National Comparison

22 Pages Posted: 12 Feb 2009 Last revised: 24 Sep 2010

See all articles by Dimitrios Vasiliou

Dimitrios Vasiliou

National and Kapodistrian University of Athens

Nikolaos Daskalakis

Panteion University

Date Written: July 1, 2007


The main objective of this paper is to investigate whether differences in institutional characteristics result in different capital structure determination among countries. First, we analyze the institutional setting in Greece compared with that of other countries. Second, we provide survey information about the determinants of capital structure in Greece and compare our findings with those of similar surveys in the United States and Europe based on Graham and Harvey [Graham, J., & Harvey, C. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60, 187-243], Bancel and Mittoo [Bancel, F., & Mittoo, U. (2004). Cross-country determinants of capital structure choice: A survey of European firms. Financial Management, 33(4), 103-133 Winter 2004] and Brounen, de Jong and Koedijk [Brounen, D., de Jong A., & Koedijk, K. (2006). Capital structure policies in Europe: Survey evidence. Journal of Banking and Finance, 30, 1409-1442] respectively. Greek firms seem to follow an own-business policy and seem to care more about the disadvantages of debt than try to exploit its advantages. Financial distress considerations,market timing and competitiveness are important factors, whereas agency costs of equity, pecking order and the signaling theory do not seem to apply. Conclusions are relatively similar with those of other countries, though specific differences that can be attributed to the different institutional settings do exist. In general however, we conclude that differences in institutional characteristics do not seem to affect the way of thinking of financial managers when they decide on capital structure issues.

Keywords: Institutional characteristics, Capital structure, Questionnaire, Comparison

JEL Classification: G3, G32

Suggested Citation

Vasiliou, Dimitrios and Daskalakis, Nikolaos, Institutional Characteristics and Capital Structure - A Cross-National Comparison (July 1, 2007). Global Finance Journal, Vol. 19, No. 3, pp. 286-306, 2009, Available at SSRN:

Dimitrios Vasiliou

National and Kapodistrian University of Athens ( email )

0030 210 3689486 (Phone)

Nikolaos Daskalakis (Contact Author)

Panteion University ( email )

136 Sygrou
GR17671 (Fax)

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