Testing the validity of modern capital structure theories in multinational companies

This study investigates the validity of modern capital theories using panel data regression methods. The examined theories include the trade-off theory, financial hierarchy theory, agency theory, and signal effect theories. The analysis includes companies listed in the stock market indices of developed and developing countries, excluding the financial services sector, between the years 2013 and 2022. The sample consists of firms that have provided uninterrupted data in the Turkey BIST30, Germany DAX40, France CAC40, USA DOW30, South Africa JTOPI40, and India NIFTY50 indices. Three different models are employed to establish relationships between dependent and independent variables. The dependent variables include leverage ratio, short-term leverage ratio, and long-term leverage ratio, while the independent variables consist of firm size, profitability, growth, asset structure, tax factor, and non-debt tax shield. The results confirm the validity of modern capital theories in both developed and developing countries.