The Effects of Financial and Credit Constraints on Capital Structure Choice in Emerging Markets

• Main Authors: Kannika Saeliw, 劉永潔
• Other Authors: Sheng –Syan Chen
• Format: Others
• Language: en_US
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/42329858202357612010

碩士 === 國立臺灣大學 === 財務金融學研究所 === 96 === This study investigates the effects of the credit constraints and financial constraints of firm on the capital structure choice in emerging markets by using the panel regression method. Since focused firms are likely to become credit constrained due to their lower credit quality, this research uses focused firm as the measure for credit constrained firm. Additionally, this research identifies firms as financial constrained if firms have investment opportunities but do not have sufficient cash to invest. The results indicate that (1) focused firms have lower leverage ratio than diversified firms, (2) financial constrained firms have lower leverage ratio than financial unconstrained firms, (3) firms which are facing both financial constraints and credit constraints have low leverage ratio. The empirical evidence for the impacts of financial and credit constraints suggests that diversification can alleviate credit constraints, and the contracting costs hypothesis dominates the pecking order hypothesis when firms have financial constraints.