This thesis analyse which company specific factors that affect the capital structure inthe airline industry. Our sample consists of 39 airlines from different parts of theworld, and data is collected from the last decade. We will use previous empiricalstudies of capital structure as a reference when interpreting the results from oursample.In the first section of this paper, we will present the airline industry and the maincapital structure theories.We are going to use an econometric approach when analysing our data sample. Ourdependent variables are the book or the market debt ratio in the two different models.The independent variables consist of company specific factors as: size, profit, growth,tangibility of assets, leasing, financial strength, strategy, ownership situation andtransparency. Some interesting findings are that the market model explains 31.1% ofthe variation in capital structure of airline companies, and that six out of sevenindependent variables are significant. The book model does only explain 18.5%, andhave only one significant variable. This may be explained by the argumentation thatthe market model are more forward looking than the book model which imply thatstakeholders base their decision on the future expectations rather than historicalvalues.Generally, there are many theories that deal with capital structure issues, and we aregoing to test whether some of them are superior for our sample. Our findings showthat none of the mentioned models are able to fully explain the obtained results, whichis in line with the common consensus.
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