Main determinants of corporate debt structure and investigation of 'fallen angels' : evidence from the Nordic countries

Abstract

The objective to this thesis is to examine which measurable firm variables that are the main determinants of corporate debt structure amongst Nordic rated companies, and if "fallen angel" companies experience an alteration to their debt structure once downgraded. Previous studies have indicated several coherences that are proven valid for mainly the US market. Our study seeks to examine if these coherences also are applicable to the Nordic countries, and if there are other present determinants that are not discussed in previous empirical literature. On the basis of several univariate and multivariate regression models and tests, we have found evidence that support profitability, firm size, intangible assets and rating to play an integral part in determining corporate debt structure. Our results indicate that each of them is influencing the utilization of different types of instruments. However, our research does not indicate any significant changes in debt structure when "fallen angels" are downgraded.