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Observed Capital Structure
Observed Capital Structure
Observed Capital Structure
Among industrialized nations, American, British, German and Australian companies have lower average book value debt ratio than do their counterparts in Japan, France, Italy and other European countries. On the other hand, British and German firms have by far the lowest market value leverage ratios. Among developing (newly-industrialized) countries, debt ratios in Singapore, Malaysia, Chile and Mexico are typically lower than in Brazil, India or Pakistan.
The exact reasons for these differences are unclear, but historical, and even cultural factors all probably play a part, as does a nations reliance on capital markets versus banks for ccorporate financing.