The determinants of capital structure: Evidence from the GCC countries

This paper investigates the determinants of capital structure in the context of three GCC countries and the impact of their stock markets' development on the financing choices of firms operating in these markets. This study has adopted the approach of combining the dynamism of capital structure and the impact of stock market development on firms financing choices. The GCC countries are non-tax paying entities which make them an interesting case to investigate whether the determinants of the capital structure of firms operating in these markets are similar to those operating in the developed and industrial countries. Also, there is no single published study which examines and compares the capital structure of firms listed in the GCC stock markets or the stock markets development and firms financing choice in these countries. Our results reveal that 1) corporate capital structure in these countries can be explained by the determinants suggested in corporate finance models 2) stock markets in the these countries have become more developed and considered an important tool for corporate financing decisions.