Firm-specific factors as determinants of capital structure in the absence of taxes

Extreme Bounds Analysis (EBA) is used to identify the determinants of capital structure in a tax-free environment, using data on Kuwaiti shareholding companies. The results which are more supportive of the pecking order theory than the trade-off theory, show some evidence for the importance of growth opportunities and profitability. Judged by robustness, the number of determining variables is smaller than what is typically found in the literature.