Inter-country Comparisons on Financial Determinants of Corporate Capital Structure for Firms in the United States and the Republic of Korea

The study conducts empirical analyses concerning the financial determinants of corporate capital structure. The sample observations selected were the U.S. firms listed on New York Stock Exchange and their Korean counterparts listed on Korea Exchange (KOSPI) during the period of 2010 to 2015. To conduct inter-country comparisons, three relevant hypotheses were separately tested to determine the financial factors that influence corporate leverage for firms in the two capital markets. With respect to the test results, the majority of the proxy variables inclusive of profitability, showed their pronounced effects on the relevant leverage ratio, while only one variable such as corporate profitability (among the five explanatory variables) had been statistically important in the former study of Kim Han-Joon and Berger (2008). Moreover, all of the seven explanatory variables employed in the model, demonstrated their significant discriminating power between the two comparison groups, (i.e., the U.S. and Korean capital markets) with only one variable (GROWTH) with a negative sign of its coefficient. It is anticipated that the results are effectively utilized for theoretical and practical purposes, given the dynamics of possible integrations of a global capital market.