International Capital Structures 569Zingales used a database that covered fewer firms than the OECD but that provided
a more complete breakdown of balance sheet data. They concluded that differences
in accounting practices can explain much of the cross-country variation in capital
structures.
Rajan and Zingales’ results are summarized in Table 15-5. There are a number of
different ways to measure capital structure. One measure is the average ratio of total
liabilities to total assets—this is similar to the measure used by the OECD, and it is
reported in Column 1. Based on this measure, German and Japanese firms appear to
be more highly levered than U.S. firms. However, if you look at Column 2, where
capital structure is measured by interest-bearing debt to total assets, it appears thatTABLE 15-5 Median Capital Structures among Large Industrialized Countries
(Measured in Terms of Book Value)Total Interest-Bearing Total
Liabilities to Debt to Total Liabilities to Debt to Total
Total Assets Assets Total Assets Assets
(Unadjusted for (Unadjusted for (Adjusted for (Adjusted for Times-Interest-
Accounting Accounting Accounting Accounting Earned (TIE)
Differences) Differences) Differences) Differences) Ratio
Country (1) (2) (3) (4) (5)
Canada 56% 32% 48% 32% 1.55
France 71 25 69 18 2.64
Germany 73 16 50 11 3.20
Italy 70 27 68 21 1.81
Japan 69 35 62 21 2.46
United Kingdom 54 18 47 10 4.79
United States 58 27 52 25 2.41
Mean 64% 26% 57% 20% 2.69
Standard deviation 8% 7% 10% 8% 1.07
Source:Raghuram Rajan and Luigi Zingales, “What Do We Know about Capital Structure? Some Evidence from International Data,” The Journal of Fi-
nance,Vol. 50, no. 5, December 1995, 1421–1460. Used with permission.
TABLE 15-4 The 2001 Transparency International Corruption
Perceptions Index (CPI)Top-Ranked Countries Bottom-Ranked Countries
Rank Country 2001 CPI Score Rank Country 2001 CPI Score
1 Finland 9.9 82 Tanzania 2.2
2 Denmark 9.5 83 Ukraine 2.1
3 New Zealand 9.4 84 (Tie) Azerbaijan 2.0
4 (Tie) Iceland 9.2 Bolivia 2.0
Singapore 9.2 Cameroon 2.0
6 Sweden 9.0 Kenya 2.0
7 Canada 8.9 88 (Tie) Indonesia 1.9
8 Netherlands 8.8 Uganda 1.9
9 Luxembourg 8.7 90 Nigeria 1.0
10 Norway 8.6 91 Bangladesh 0.4Source: http://www.transparency.org/cpi/2001/cpi2001.html. Reprinted by permission.