Dynamic capital structure of Dutch listed companies

Since Modigliani and Miller (1958) have started the discussion regarding capital structure, a lot of insights regarding the capital structure of firms came into existence. However, a gap still exists between theory and practice for the reason that capital structure decisions are often of minor importance, other corporate purposes are important as well. In this thesis, a relatively new topic in research on capital structure is investigated, that is the effect of events (internal and external) on changes in capital structure. The process of capital structure decisions is a dynamic process and capital structures changes gradually due to different internal and external events. Over the period 1993 – 2008, all events per company are investigated and 43 shocks are observed in the capital structures of ten Dutch listed companies. Most of the observed shocks are caused by internal events, but also external events and the combination of internal and external events caused shocks in capital structure. Because financing decisions are not stand alone decisions and often part of a strategy of the firm (Schauten and Spronk (2006)), strategies are recognized in the capital structures of the investigated companies. In this thesis, these strategies are called plots. Eleven different plots are identified in the capital structures of the investigated companies.