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A Review of Empirical Capital Structure Research and Directions for the Future

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Graham, John R., Leary, Mark T.·2011·Annual Review of Financial Economics
DOI 10.1146/annurev-financial-102710-144821
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Abstract

This article reviews empirical capital structure research, concentrating on papers published since 2005. We begin by documenting three dimensions of capital structure variation: cross firm, cross industry, and within firm through time. We summarize how well the traditional trade-off and pecking order approaches explain these sources of variation and highlight their empirical shortcomings. We review recent research that attempts to address these shortcomings, much of which follows seven broad themes: (a) Important variables have been mismeasured in empirical tests, (b) the impact of leverage on nonfinancial stakeholders is important, (c) the supply side of capital affects corporate capital structure, (d) richer features of financial contracts have been underresearched, (e) value effects due to capital structure appear to be modest over wide ranges of leverage, (f) estimates of leverage adjustment speeds are biased, and (g) capital structure dynamics have not been adequately considered. Much progress has been made in addressing these issues, some of which has led to the study of an expanded range of capital structure topics, including debt maturity, loan and covenant characteristics, collateral effects, and alternative financing sources such as leasing and credit lines. We conclude by summarizing unanswered questions and areas for future research.

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Metadata

Authors
Graham, J. R., & Leary, M. T.
Affiliations
  • National Bureau of Economic Research (US)
  • Washington University in St. Louis (US)
ORCID
Venue
Annual Review of Financial Economics
Publisher
Annual Reviews
Published
2011-12-01
Volume
3
Issue
1
Pages
309-345
ISSN
  • 1941-1367 (ISSN-L)
  • 1941-1375
DOI
10.1146/annurev-financial-102710-144821
OpenAlex
W4243946340
Cited by
547
References
4
Citations by year
2026: 34 · 2025: 51 · 2024: 37 · 2023: 44 · 2022: 45 · 2021: 34 · 2020: 49 · 2019: 35 · 2018: 52 · 2017: 37 · 2016: 41 · 2015: 26 · 2014: 23 · 2013: 19 · 2012: 11
FWCI
17.26
Type
journal article
Language
en
Open access
Locations
  • Annual Review of Financial Economics (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Analysis and Corporate Governance
  • Social Sciences › Law › Corporate Insolvency and Governance
Keywords
capital structure, trade-off theory, pecking order theory, leverage, debt maturity, debt covenants, collateral, leasing, credit lines, leverage adjustment speed, financial contracts

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CoChat. (2026). Citation check: A Review of Empirical Capital Structure Research and Directions for the Future. https://app.cochat.ai/papers/10.1146/annurev-financial-102710-144821
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Graham, J. R., & Leary, M. T. (2011). A Review of Empirical Capital Structure Research and Directions for the Future. Annual Review of Financial Economics. https://doi.org/10.1146/annurev-financial-102710-144821