Factors Influencing the Capital Structure Deviation from the Optimum

The main goal of company’s management is to gain maximum company value. Therefore, it’s essential to test whether current capital structure brings maximum company value. Optimal capital structure is such combination of debt and equity which maximizes market value of capital. But what if company’s management already knows the optimal capital structure, but the current structure deviates from being optimal? This question has been hotly debated over the last few years. The issue is important both for company owners (concerning dividends) and for investors (when making investment decisions). The topic on capital structure deviation from the optimum has become a topic of theoretical and empirical concentration as by Russian researchers, such as by foreign researchers. However, we didn’t find any papers on Russian sample. In this paper we aim to answer the question: which factors influence the capital structure deviation from the optimal level? The panel data of 697 Russian public companies over the period of 2005-2013 were used to identify that an increase in such factors as non-debt tax shield, profitability and tangibility of assets make capital structure deviation from the optimum larger. But an increase in company size, its growth rate and its market-to-book value makes current capital structure closer to the optimum.