Does religion affect capital structure?

Mufaddal Baxamusa and Abu Jalal

Research in International Business and Finance, 2014, vol. 31, issue C, 112-131

Abstract: We hypothesize that if the cultural characteristics of a region are important, then firms located in Protestant- and Catholic-majority counties within the U.S. will have different attitude toward leverage. We find that a 1% increase in a county's Protestant religiosity leads to a 0.4% lower leverage and less frequent debt issuances. This religiosity also has significant effect on the firms’ adjustment speeds toward the target capital structure. Using a sample of international firms, we find that these differences in leverage in the U.S. are similar to the behavior of firms in Catholic and Protestant countries outside of the U.S.

Keywords: Capital structure; Culture; Religion; Behavioral finance; Debt; Equity (search for similar items in EconPapers)
JEL-codes: G32 M14 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:31:y:2014:i:c:p:112-131

DOI: 10.1016/j.ribaf.2013.09.003

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