OWNERSHIP CONCENTRATION , EQUITY LIQUIDITY, AND CAPITAL STRUCTURE

A CASE STUDY ON NON-FINANCIAL FIRMS LISTED IN THE STOCK EXCHANGE OF THAILAND DURING YEAR 2001-2011

Abstract

Impacts of ownership concentration and equity liquidity on capital structure has received much attention in the literature. However, the combined effect of ownership concentration and equity liquidity on capital structure has been unexplored while the significant relationship between them has been documented in the literature. This study seeks to explore the combined effect of ownership concentration and  equity liquidity on  capital structure in Thai context where, generally, ownership structure is highly concentrated and quity of firm is less liquid. The results show that the combined effect of ownership concentration and trading volume has a significant and negative effect on firm's leverage (in both non-crisis and crisis period). This implies that forms with relatively low concentrating in ownership and relatively high trading volume would use relatively low debt in their capital structure.