Ownership Matters: The Capital Structure of Private Firms

This paper investigates the capital structure of a large sample of U.S. private firms from 2004 to 2013. There is a considerable heterogeneity in private firm capital structure not only in terms of the level of leverage but also with regard to the issuance of specific debt instruments. Leverage, debt type usage, and debt specialization are dynamic and strongly related to observable firm characteristics largely in support of contract theory. Unobservable firm and industry characteristics are strong determinants of leverage levels and debt specialization. Macro credit conditions are not related to private firm leverage but are strong determinants of the degree to which firms diversify their debt capital structures.