Relationship between Firm-Specific Characteristics and Capital Structure: A Review based Study

Abstract

Focusing on the factors and dynamics affecting companies' capital structure decisions in different environments, this paper thoroughly evaluates the body of knowledge already in use on capital structure. Essential topics that significantly affect the capital structure changes were found in the review: firm-specific elements, ownership arrangements, macroeconomic situations, cultural effects, and industry variations. With more extensive and more profitable companies exhibiting a more inclination to employ debt financing, it emphasizes the importance of profitability, business size, and growth possibilities as primary drivers of financing decisions. The study investigates how market timing, taxation, and corporate governance structures impact capital structure strategies, particularly in various cultural and legal settings. The paper also covers sectoral variances, sector, country-specific elements, and family-owned companies.