Determinants of Corporate Capital Structure in East Asia: Are there differences fromo the Industrialized Countries

Mamoru Nagano
Waseda University Institute of Finance
Juli 2003

Abstract
This paper investigated micro-economic variables that determined corporate capital structure in the East Asian countries of Indonesia, Korea, Malaysia, the Philippines and Thailand in the aftermath of the 1997 Asian financial crisis. In general, there is a high level of dependency by firms on short-term external financing. Based on empirical analyses, the study found a significant negative relationship between firm profitability and corporate debt-to-equity (DE) ratio in all the sample countries. Firm size also has a direct relationship with DE ratio in many countries. On the other hand, the relationship between corporate debt-to-equity (DE) ratio and firm’s tangibility -- generally significant in the industrialized countries -- is entirely insignificant even in the post-crisis period.

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