Capital structure and its determinants in New Zealand firms

Abstract

The current study aims to empirically explore the relationship between firm characteristics, corporate governance and capital structure in New Zealand's large listed companies. Eight years of data for 40 firms listed on the NZX50 Stock Exchange, are collected and observations are analysed using a conditional quantile regression. This study finds firm-specific characteristics rather than corporate governance variables play a significant role in determining firm leverage levels. The results indicate that finance policies need to vary across firm type and firm characteristics, and should match with the different borrowing requirements of listed firms.

Keywords:

• capital structure
• firm characteristics
• corporate governance
• quantile regression
• financial policy
• New Zealand

JEL Classification:

• G32

Additional information

Notes on contributors

Nirosha Hewa Wellalage

Nirosha Hewa WELLALAGE is a Senior Lecturer in Finance at the University of Waikato Management School. Her main research interests are in the areas of corporate governance, corporate finance and small business finance. She is an active researcher and has published her findings in several international refereed journals.

Stuart Locke

Stuart LOCKE is Professor at Department of Finance, University of Waikato Management School, Hamilton, New Zealand, 3240. Stuart has a PhD in finance and a background in finance, economics, valuation and chartered accountancy. His current research interests are in corporate governance capital market movements, agribusiness finance, small business finance and personal financial planning. Research projects are ongoing in the governance, market movement, agribusiness finance and small business areas with multiple publications in 1999 through 2008. Stuart has held positions at universities in New Zealand, Australia and the United Kingdom. He has worked in banking in Australia and Singapore and with Treasury in Australia. Most recently, before joining Waikato Management School he was involved in Executive Education at Massey University with the MBA programme and the public sector management programmes in Samoa, Cook Islands and Tonga. Dr Locke currently teaches professional courses in finance and management.