Economic and Financial Reports Volume 02/2001

Do capital expenditures determine debt issues?

The paper is organised as follows. The first section describes the aggregate accounts of the companies in our sample and presents the most relevant summary statistics. In the second section, after proposing an empirical specification that is broadly consistent with the main theories of capital structure, we discuss the results from estimation of the model. The third and final section concludes. Excellent survey material on capital structure can be found in Harris and Raviv (1991) and the recent “red book” of the Deutsche Bundesbank and the Banque de France edited by Sauvé and Sheuer (1999). Therefore, we do not feel compelled to discuss the existing literature in general terms. Rather, we refer to selected specific papers as the need arises in the discussion.