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The moderating effect of firm age on capital structure choices: evidence from emerging markets

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Abstract

This research analyses how a firm’s age moderates the link between emerging market firm characteristics such as their profitability, firm size, asset tangibility, and their financing decisions (i.e., the level of leverage undertaken by these firms). Our empirical analysis reveals more evidence that firm age, as a firm-specific factor, not only amplifies the negative influence of profitability on leverage but also reinforces the adverse relationship between firm size and leverage. In addition, we also found that firm age weakens the positive relationship between asset tangibility and leverage. This research contributes to the corporate finance, corporate governance and emerging market finance literature by analysing how firm age influences the effects of emerging market firm characteristics. Additionally, this study contributes to the growing literature on the determinants of the gearing of firms, particularly on the role of firm-specific factors in explaining the variation in firms’ leverage.

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Data availability

The datasets analysed in our study are not publicly available but are available from the corresponding author on reasonable request. Interested researchers may contact the corresponding author to gain access to the data under conditions that respect the privacy and confidentiality of the data.

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Authors and Affiliations

  1. Department of Accounting and Finance, School of Business and Economics, Universiti Putra Malaysia, UPM Serdang, 43400, Serdang, Selangor, Malaysia

    Bolaji Tunde Matemilola

  2. The Faculty of Business Administration and Accountancy, Khon Kaen University, 123 Mittraparp Rd., Muang Khon Kaen, Khon Kaen, 40002, Thailand

    Ploypailin Kijkasiwat

  3. Department of Accounting and Finance, Faculty of Business and Management (FBM), UCSI University Malaysia, No.1, Jalan UCSI, UCSI Heights (Taman Connaught), Cheras, 56000, Kuala Lumpur, Malaysia

    Chee Yoong Liew

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  1. Bolaji Tunde Matemilola
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Matemilola, B.T., Kijkasiwat, P. & Liew, C.Y. The moderating effect of firm age on capital structure choices: evidence from emerging markets. J. Ind. Bus. Econ. (2024). https://doi.org/10.1007/s40812-024-00299-z

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