Capital structure choice: Macroeconomic conditions and financial constraints

Robert A. Korajczyk, Amnon Levy*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

405 Scopus citations


This paper provides new evidence of how macroeconomic conditions affect capital structure choice. We model firms' target capital structures as a function of macroeconomic conditions and firm-specific variables. We split our sample based on a measure of financial constraints. Target leverage is counter-cyclical for the relatively unconstrained sample, but pro-cyclical for the relatively constrained sample. Macroeconomic conditions are significant for issue choice for unconstrained firms but less so for constrained firms. Our results support the hypothesis that unconstrained firms time their issue choice to coincide with periods of favorable macroeconomic conditions, while constrained firms do not.

Original languageEnglish (US)
Pages (from-to)75-109
Number of pages35
JournalJournal of Financial Economics
Issue number1
StatePublished - Apr 1 2003


  • Business cycles
  • Capital structure
  • Financial constraints

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


Dive into the research topics of 'Capital structure choice: Macroeconomic conditions and financial constraints'. Together they form a unique fingerprint.

Cite this