Business, Management and Accounting
8 years ago

Liquidity negatively impacts capital structure decisions in Dutch firms.

Determinants of capital structure: Evidence from the listed firms in the Netherlands
Ruilin Liu

Paper Summary

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The study looked at what factors influence how companies in the Netherlands decide on their capital structure. They used a method called OLS regression to analyze this. The results showed that having more liquidity was linked to companies choosing less debt. Also, the pecking order theory was found to be a better explanation for how Dutch firms make decisions about their capital structure.