Capital structure and stock returns: Evidence from korean stock markets

초록

In this paper, a structural equation model is applied to Korean firms listed in KOSPI and KOSDAQ from 1990 to 2016 to analyze the determinants of capital structure and stock returns and discern how capital structure and stock returns affect each other. We find that stock returns have a strongly negative (-) effect on capital structure in the structural equation model. However, leverage has no significant effect on stock returns in the structural equation model, perhaps because we use data from before, during, and after recent financial crises. In addition, asset structure (+) and profitability (-) have strongly significant effects on capital structure. Uniqueness and size show unstable effects on capital structure. As for the determinants of stock returns, size (-), B/M (+), investment (+), and market premium (+) show strongly significant effects on stock returns in all the models. Profitability shows no significant influence on stock returns. © 2019 People and Global Business Association.

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