Macroeconomic Conditions and Capital Structure over the Business Cycle: Further Evidence in the Context of Taiwan
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The authors examine the effect of macroeconomic conditions on the capital structure of firms in the petrochemical, textile, and electronics industries of Taiwan during the period 1983-2007, which covers six and a half business cycles. Controlling for the effects of economic growth, industry type, and firm-specific factors, we find that macroeconomic conditions have a significant effect on debt ratios during the sample period. Debt ratios of firms in these industries are procyclical during the period before the 1997-98 Asian financial crisis, but countercyclical during the period after the Asian financial crisis.
Emerging Markets Finance and Trade
Copyright 2012 M. E. Sharpe, INC. This is the author-manuscript version of this paper. Reproduced in accordance with the copyright policy of the publisher. Please refer to the journal website for access to the definitive, published version.