The Effect of Internationalization on Firm Capital Structure: A Meta-analysis and Exploration of Institutional Contingencies

Thomas Lindner*, Florian Klein, Stefan Schmidt

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Despite extensive research on the relationship between internationalization and firm capital structure, findings in this research area remain inconclusive. In this paper, we review the literature on the internationalization–capital structure relationship and investigate its direction, effect size, and multiple contingencies through a meta-analysis of 31 studies with a grand total of 223,658 firm observations and at least two separate samples each. Our cumulative evidence indicates lower debt ratios of multinational corporations compared to domestic corporations, in line with arguments of increased risk and agency costs in international operations. We extend our analysis to institutional characteristics in firms’ home countries and find that much of the existing variation in study findings can be explained using theory arguments on firm risk in internationalization. We contribute to an integration of international business and finance literature and point to directions for future research on determinants of the internationalization–capital structure relationship and its multiple contingencies.
Original languageEnglish
JournalInternational Business Review
Volume27
Issue number6
Pages (from-to)1238-1249
Number of pages12
ISSN0969-5931
DOIs
Publication statusPublished - Dec 2018
Externally publishedYes

Keywords

  • Capital structure
  • Debt ratio
  • International finance
  • Internationalization
  • Meta-analysis

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