Library:
Paris Champerret
Madrid
London
Paris Montparnasse
Turin
Berlin
Purpose – As globalization has been reshaping the business landscape for the last three decades, the barriers between nations appear to be diminishing. It is then important to understand whether there is convergence in structural and strategic decisions or that nationality still heavily contributes to divergences in decision-making processes. Indeed, the capital structure of a company is an important component, as it illustrates the company's cost of capital with its ability to fund operations and can predict financial risks as well. Hence, this thesis aims to explore the relationship between a listed company's nationality, which is represented by the main shareholder's nationality, and its impact on corporate capital structure, which is regarded as its Debt-to-Equity ratio.
Methodology – The thesis integrates both quantitative and qualitative approaches for an explanatory sequential design. First, an Analysis of Variances (ANOVA) will be conducted on the variables of Nationality and Debt-to-Equity ratios in five different countries across the world. Secondly, an interview with a corporate Credit Analyst will be organized to gain qualitative insights on nationality and capital structures. Thirdly, comparisons between the quantitative and qualitative findings will be presented to draw conclusions. This mixed methods research allows for interpretations of the quantitative findings (ANOVA) in more depth through the subsequent qualitative section (interview with a credit analyst).
Findings – The ANOVA analysis, excluding outliers, rejects at a 0.05 level of confidence the Null Hypothesis that the mean Debt-to-Equity ratios are the same across France, Germany, the United States, China, and Japan when considering shareholder nationality. This indicates that the main shareholder’s nationality influences the capital structure of listed MNCs. The interview confirms the findings that American owned firms are more inclined to leverage using debt, while Japanese firms tend to prefer equity due to cultural traditions and expectations.
Limitations – The quantitative findings may not be generalizable due to the scope of the sample and chosen nationalities, while the qualitative findings are mainly focused on nationality and debt financing and less on equity financing.
Keywords – Shareholders impact on Debt-to-Equity ratio, shareholder’s nationality and capital structure, convergence or divergence of strategic decisions, implication of nationality in financial decisions
