Further Evidence on the Existence of an Inter- and Intra-Industry Optimal Capital Structure for the KOSPI-listed Firms in the Korean Capital Market

국내 유가증권시장 상장기업들의 산업간 그리고 산업내의 최적자본구조의 존재에 대한 추가적인 실증 분석

  • Kim, Hanjoon (Division of Business Administration, Hoseo University)
  • 김한준 (호서대학교 사회과학대학 경영학부)
  • Received : 2017.02.20
  • Accepted : 2017.06.09
  • Published : 2017.06.30


This study investigated empirically one of the controversial subjects in modern finance, in that there is an optimal level of capital structure for KOSPI-listed firms in the Korean capital market. Given the major theories on the capital structure, such as Myers' pecking order, trade-off, and agency cost ones, this study applied an analysis of covariance models in parametric and non-parametric statistical methods. In particular, two covariates to control for the possible effects of trade-off and agency cost, were employed separately in each corresponding model, while the other proxy for pecking order rationale was adopted in previous research [1] to conduct inter- and intra-industry analyses. Based on the outcomes obtained from the study, it was demonstrated empirically that there are optimal capital structures for firms in the sample industries at the inter-industry level, whereas statistical differences indicating non-existence of an optimal point, were revealed within the industry. Accordingly, these findings suggest a new vision to potential investors that firms in the domestic market may have financial opportunities to increase their value by gradually adjusting the leverage ratios in terms of the intra-industry perspective.


Analysis of Covariance;Inter-Industry Analysis;Intra-Industry Analysis;Korean Capital Market;Optimal Capital Structure


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