Capitalstructure in the Largest Danish Unlisted and Listed Firms

Abstract

This master thesis aim has been to examine the capital structure primary for Danish unlisted firms compare with listed Danish firms. The theoretical basis was to investigate about how much the Trade-off theory from 1973 could explain the capital structure on 547 companies, where 491 companies was unlisted, and 56 companies was listed on Nasdaq OMX Copenhagen in the period 2012-2022. Before examining the Trade-off theory on the Danish unlisted and listed companies there was a review on earlier studies on approximately the same topic but with some different angles. None earlier studies on Danish unlisted firms were found which shows the need for this master thesis. The analysis was based on three hypotheses which are developed to test the Trade-off theory on the Danish companies. The determinants were chosen based on earlier studies and those that are most usen. The dependent variable measures were 𝑁𝑒𝑡 𝑑𝑒𝑏𝑡 𝐸𝑛𝑡𝑒𝑟𝑝𝑟𝑖𝑠𝑒 𝑉𝑎𝑙𝑢𝑒 and the independent variable was profitability, growth, tangibility, size, age, risk, interest rate and finally a dummy variable on listed or not listed. The results in the regression analysis shows the almost all independent variables were significant on the dependent variable except risk, which not shown any significance. The conclusion was that Trade-off theory can explain a part of the capital structure but not all, and it can’t explain it separate some of the variables indicates the Pecking order theory instead of the Trade-off theory. The chosen determinant lack the full picture of the capitalstructure. Lastly the analysis show that there is a significant difference on the capital structure between the unlisted and listed firms where the potential differences was discussed. The thesis lays the groundwork for further research in the area of capital structure on especially Danish unlisted firms.