determinants of capital structure evidence from thailand.pdfVIP

Proceedings of 3rd Global Accounting, Finance and Economics Conference 5 - 7 May, 2013, Rydges Melbourne, Australia, ISBN: 978-1-922069-23-8 Determinants of Capital Structure: Evidence from Thailand Panel Data Ramzi E.N Tarazi1 This paper investigates the determinants of capital structure in one of emerging countries and the impact of Thai stock market development on the financing choices of firms operating in this market. This study examines the ability of capital structure a variables and explains the leverage level of Thailand companies by looking at how Profitability, Firm Size, Growth Opportunities, Asset Structure, Cost of Financial Distress and Tax Shield Effects influence total debt to total asset ratio. Also, the main reason to choose Thailand country for our research is no single published study which examines the capital structure of all the firms listed in the Thai stock market and long time period. The sample size for the study is 559 companies, listed on Thai stock exchange as of 2012. Data is collected during for a period of eleven years, from 2001 to 2011 using panel data. The results reveal that, among the variables, profitability, growth opportunities, assets structure and firms size have a dominant role in explaining the variation in the total debt ratios of Thai companies. Meanwhile, the tax shield effect is inversely related to the level of leverage.