CentER

Abe de Jong

Abstract:
This Ph.D. thesis investigates capital structure decisions in Dutch firms. Firms are faced with the choice from a variety of sources of financing for the funding of their activities. These choices determine the firms' capital structures. Building on the well known theorems of Modigliani and Miller, theoretical contributions provided many potential explanations for the choice between debt and equity. Early studies involve taxation and bankruptcy costs. Recently, theoretical contributions are based on agency oblems, which are caused by asymmetric information and divergent interests. This thesis consists of three studies that aim to test the empirical relevance of a selection of theories for Dutch exchange-listed firms. In the third study, a novel empirical a roach on the basis of questionnaires is advocated and implemented. The results of the tests show the relevance of theories of bankruptcy costs and tax benefits that are associated with debt. No evidence is found for the existence of a relation between cap al structure and the manifestation of agency problems between the providers of debt and equity. On the contrary, agency problems between managers and providers of equity are found to play a prominent role in the Netherlands.