What is the role of institutional investors in corporate capital structure decisions? A survey analysis

Research output: Contribution to journalArticlepeer-review


We survey institutional investors about their role in capital structure decisions and views on capital structure theories. Over 82% of investors believe they influence corporate capital structure decisions, especially for smaller, younger, and more financially constrained firms. Unlike corporate managers, investors consider agency costs of free cash flow important drivers of capital structure. Investors' responses also support pecking order and market timing theories. Most investors find financial constraints important, with components of the Kaplan–Zingales and Whited–Wu indexes dominating other proxies. Overall, our findings suggest a first-order impact of investor preferences on capital structure decisions.

Bibliographical metadata

Original languageEnglish
Pages (from-to)270-286
Number of pages17
JournalJournal of Corporate Finance
Early online date7 May 2019
Publication statusPublished - 1 Oct 2019