Kapitalstrukturen for OMX København og First North: En analyse af forskellene imellem de to markeder

Andreas Lehrmann Hochstrasser

Student thesis: Master thesis


It has been shown in many investigations of different markets and different stock exchanges that a company’s capital structure varies from company to company. However, great differences arise, when the reason for this variation is discussed and several numbers of theories has been suggested. The mother of all modern capital theory is Miller and Modigliani’s irrelevance theorem, which suggests that with a number of constraints, the portion of debt in a company is irrelevant. When you removes these constraints two theory-areas stems, The Trade-off theory and The Pecking Order theory. The trade-off theory suggests that the capital structure is constant, when you look on a longer period, while the pecking order theory on the other hand suggests that the capital structure will fluctuate with the need for debt and that there isn’t any optimal capital structure. The following paper has investigated how the capital structure varies when you compare the companies listed on OMX Copenhagen to the companies listed at First North and how the differences can be explained. Furthermore it has been investigated how the development in capital structure has been, if there are any differences and if the financial crisis in 2008 has had any influence on the capital structure. The paper has come with a string of conclusions, with the main conclusion being that there is a difference in capital structure between the companies at OMX Copenhagen and the companies at First North, with OMX Copenhagen having the larger share of debt compared to First North. The share of debt compared to total assets has thus from 1995-2009 in average been 0.26 for OMX Copenhagen while from 2006-2009 it has in average been 0.15 for First North. The share of total liabilities compared to total assets has in average in the same periods been respectively 0.51 and 0.47 for OMX Copenhagen and First North. Furthermore we concluded through a multiple regression that the lower levels of Profitability, Size and Tangibility for First North can explain the lower share of debt, while the higher level of Growth Opportunities also can explain the lower level of share of debt. Regarding the development in capital structure it’s difficult to conclude anything with certainty; however we see that there are some fluctuations in the development which points to the fact that there isn’t an optimal capital structure. Also there is some similarity between the development in stock prices and capital structure but we’re unable to see a reaction to the financial crisis in the data material. Overall we can conclude that there are several differences in the capital structure between OMX and First North and that the theory that seems to best describe the data material is the trade-off theory.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2010
Number of pages116