Ryabova E.V.National Research University Higher School of Economics - Nizhny Novgorod, Nizhny Novgorod, Russian Federation eryabova@hse.ru
Romanov S.V.National Research University Higher School of Economics - Nizhny Novgorod, Nizhny Novgorod, Russian Federation sromanov@kpmg.ru
Importance The experience of foreign and Russian empirical studies devoted to the corporation capital structure proves that one of the main drawbacks of the models suggested by different authors is their relatively poor explanatory power. Some of the authors associate this phenomenon with high impact of uncertainty in the process of company's selection of sources of financing. It is associated with the fact that institutional factors, which are able to influence the process of sources of financing selection, are insufficiently addressed. Objectives The present research evaluates institutional factors' impact on the industry's and company's leverage. Based on the identified significant dynamic factors and an array of specific determinants, we attempted to develop dynamic models to assess the company's financial leverage. Methods An evaluation and feasibility study of the most significant institutional factors which are able to impact financial leverage in the industry was carried out with the aid of econometric instruments. A review of foreign and Russian researches devoted to the topic was conducted in order to select and substantiate specific factors. At the same time, in the present study, we used general scientific methods, such as analysis, synthesis, deduction and modeling. Results Firstly, present study proves an impact of institutional determinants on the industry leverage through the case study of the Russian companies. Secondly, we proposed a model, which takes into account the mechanism of dynamic adaptation of companies' leverage level, which assumes simultaneous consideration of both institutional and specific factors. Conclusions and Relevance From a practical standpoint, the obtained models allow not only describing the companies' behavior when taking financial decisions, but also they can be used for predicting their capital structure.
Keywords: capital structure, dynamic model, institutional factor, leverage, model
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