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Title: The Norm Theory of Capital Structure: International Evidence
Authors: Lam, S..-S. 
Zhang, W. 
Lee, R.R.C.
Issue Date: 2013
Citation: Lam, S..-S., Zhang, W., Lee, R.R.C. (2013). The Norm Theory of Capital Structure: International Evidence. International Review of Finance 13 (1) : 111-135. ScholarBank@NUS Repository.
Abstract: Akerlof proposes that the norms of decision makers can bridge the gap between New Classical economic theories and conflicting empirical evidence. We apply his framework to cross-country capital structure decision making and propose a norm theory of capital structure. Consistent with its predictions, we find that two principal components that represent the manager-subordinate relationship and the manager-environment relationship in a national culture are significantly and negatively related to the median leverage ratio at the country level. This study is among the first to provide a direct link between national culture and capital structure as made operational through managerial norms. © International Review of Finance Ltd. 2012.
Source Title: International Review of Finance
ISSN: 1369412X
DOI: 10.1111/j.1468-2443.2012.01154.x
Appears in Collections:Staff Publications

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