ABSTRACT
This paper investigates whether the Great Recession altered the capital structure determinants of firms. We use panel data of 208 Canadian non-financial firms listed on the Toronto Stock Exchange (TSX) from 1999 to 2016 and perform econometric analysis. We compare the corporate borrowing pattern in three phases: the pre-recession (1999 to 2006), during the recession (2007 to 2009), and the post-recession (2010 to 2016). We find that the significance of growth prospects, collateralizable assets, and profitability varies across all three phases while making corporate borrowing or capital structure decisions. Our research is distinctive because it examines the determinants of capital structure for a specific country and how it can change with the economic situation.
Keywords
Capital structure, Debt ratio, Non-financial, Recession, Determinants