Capital Structure Choice In Emerging Markets: Evidence From Russia

This paper examines the issue of the capital structure choice of public Russian companies in comparison with firms, which operate in developed countries. Based on the analysis of 2015-2020 data it was concluded that the choice of the capital structure on the Russian market is more strongly influenced by the size of the company and the availability of liquid tangible assets. This is due to the peculiarities of the Russian market, in particular, high country and foreign exchange risks, which make collateral lending more attractive. One of the factors of the scientific novelty of the work is the assessment of the impact of the COVID-19 pandemic on the level of financial leverage. It was shown that the pandemic had a significant impact on the debt-to-equity ratio only in developed countries; this effect was insignificant for Russian companies; this fact is indicatively confirmed by a less significant pandemic impact on Russia's GDP. Companies in Russia have not increased their leverage as much as firms from developed countries. In addition, the fall in the value of shares of companies in Russia was also not so significant. In addition, the work shows that for Russian companies in the process of determining the optimal capital structure, a pecking order theory is more applicable than a trade-off theory. This provides a better understanding of the incentives of company management and defines the field for further research that may be related to management behavior