Capital Structure in The Nordics : An empirical cross-country analysis on determinants of capital structure in listed, non-financial firms from 2007 to 2022

Abstract

We examine determinants of capital structure by analyzing the financing decisions of listed, non-financial firms in Denmark, Sweden, Norway, and Finland from 2007 to 2022. At an aggregate level, firm leverage is fairly similar across the Nordic countries, and many firm-specific factors appear to be similar. We find market-to-book value, liquidity, profitability, size, non-debt tax shields, tangibility, bankruptcy risk, corporate tax rate, and term spread to be the most reliable determinants of capital structure in the Nordics. However, due to variations in the composition of sectors and ownership structure, some significant cross-country differences remain.