The Incentives Behind Capital Structure Decision - A Survey of the Swedish Market -

Sammanfattning: The aim of this thesis is to investigate which the main determinants of capital structure in Swedish listed firms are and to identify which incentives lies behind managers choice of capital structure determinants. Further, the study investigates whether the Post Keynesian theory and theories which incorporate behavioral aspects can be used to explain the capital structure decisions or if the traditional Neoclassical theory give an better explanation. We have used a qualitative method to analyze the determinants of capital structure and the managers incentives behind capital structure decision. We conducted a survey which was sent to 83 Chief Financial Managers and financial executives in Swedish firms listed on Mid Cap or Large Cap. The questionnaire was on-line which enabled for the respondents to quickly and convenient respond. Financial flexibility, long-term capacity and maintain a desirable credit rating are the major factors which affected the managers choice of capital structure. The managers show concern about the uncertainty of the future but seem to be of little concern about the firm’s shareholders. The findings deviate from the Neoclassical theory and the Post Keynesian theory and behavioral finance theory seem to better explain the managers incentives.