Capital structure decisions: The views of investment advisors

In this research a survey was used to gain insight into the factors that affect the choice of capital structure, from the perspective of investment advisors. Content analysis of responses to open-ended questions in the questionnaire and interviews showed a clear support for the optimal capital structure theory and indicated theory-based approaches to the choice between different financing instruments. Factor analysis showed that taxation implications, market concerns and financing costs affect capital structure decisions. The results indicate that asymmetric information and signalling are important concerns but provide little evidence regarding the importance of agency considerations.