Capital Structure Determinants of Russian Public Companies

Abstract

This paper investigates the determinants of capital structure choice of Russian public companies. The sample comprises 7 times more companies than any other known study of Russian firms. Significant influences on financial leverage are identified for the company’s profitability, tangibility of assets, growth opportunities, size, ownership structure, credit rating, accounting standard, life cycle stage, level of intellectual capital, as well as for time effects. These results, first, help to challenge the conclusions of the prior research. Second, they evidence the validity of the trade-off and pecking order theories, market-timing and managerial over-optimism hypotheses. Third, they prove the influence on capital structure of several institutional features of the Russian corporate environment: higher non-transparency of economic relationships and a monopolistic character of the economy.