Determinants of Capital Structure Complexity

Abstract While capital structure is usually presented in the context of a choice between debt and equity, even within these choices we observe different sources of capital, especially related to debt. Recent studies have arrived at differing conclusions regarding the reliance upon different sources for capital and regarding the importance of those sources. We find that the complexity of capital structure is related to the need for external capital, access to debt markets and the capacity for additional borrowing. Each of these determinants has a unique impact on capital structure complexity; however, access to capital markets serves as a mitigating factor in capital structure complexity for those firms with a financial deficit.