Determinants of Capital Structure in Canadian Non-financial Firms: A Recent Study

The purpose of this research is to examine firm-specific determinants of capital structure in Canadian non-financial firms. The research uses a sample of 208 firms listed on Toronto Stock Exchange from 1999 to 2016. Panel data analysis has been performed using a fixed effects model estimation. The study also investigates the impact of firm-specific factors on capital structure in three different phases: pre-crisis (1999-2006), during crisis (2007-2009), and post-crisis (2010-2016).

The analysis suggests that age, liquidity, asset tangibility, size, growth opportunities, and profitability are the determinants of capital structure in Canadian non-financial firms. The findings suggest that Pecking Order Theory better explains capital structure choices across Canadian non-financial firms. However, some hypotheses of Trade-off Theory are also applicable in certain contexts. This study adds to the existing literature on factors influencing capital structure of Canadian non-financial firms. Both practitioners and academicians may benefit from the findings of this study.