Capital Structure Behavior in Listed and Non-listed Companies: A Scandinavian Study

Jacob Gadensgaard & Victor Sinha Hansen

Student thesis: Master thesis


This paper seeks to extend the understanding of capital structure behavior among Scandinavian companies, spe-cifically identifying determinants of leverage levels and the speed of adjustment (SOA) in their capital structures. Existing literature predominantly focuses on publicly listed companies; this work contributes to the field by com-paring capital structure behaviors between publicly listed and private firms. In a departure from the existing body of research, this paper incorporates macroeconomic indicators, offering a holistic perspective aimed at enhancing the nuanced understanding of capital structure dynamics, underscoring the importance of both firm-specific and macroeconomic variables.

The study is grounded in a sample of 635 public and private firms operating in Scandinavia over the period of 2005-2021. A series of robust statistical evaluations were conducted to analyze the dynamics of capital structure, paying particular attention to the impact of ownership structure on i) the relative debt proportion within the capital structure, and ii) the behavior of capital structure adjustments.

The findings demonstrate that ownership status is reflected in a company’s capital structure behavior concerning leverage levels and SOA. Specifically, it is observed that private companies typically employ a larger proportion of debt in their capital structure compared to publicly listed firms. In terms of capital structure adjustment behavior, publicly listed companies are more proactive, whereas private firms exhibit a higher degree of inertia. Interestingly, publicly listed companies, in contrast to their private counterparts, manifest market timing behavior by leaning towards equity financing during periods of favorable macroeconomic conditions. Notwithstanding these diver-gences, there is a remarkable consistency in the firm-specific factors influencing leverage levels and SOA across both types of firms. Consequently, ownership status does not appear decisive in determining which firm-specific factors exert substantial influence on capital structure behavior in Scandinavian firms. Furthermore, it is notewor-thy that both publicly listed and private firms exhibit market timing behavior, showing higher SOA during periods of low-interest rates.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2023
Number of pages109