The Effect of International Acquisitions on the Structure of the Capital

This paper examines the effect of foreign acquisitions on the capital structure of corporations. A multivariate analysis using debt flow data examines the relation between additional financing through long-term debt after foreign acquisitions and the characteristics of these acquisitions, the acquiring corporation and the environment of the acquired subsidiaries. The result of this paper suggest that in addition of the two major determinants of the capital’s structure (size and profitability), debt financing can also be explained by a geographical an d industrial diversification effect.