Abstract
This paper investigates the relationship between industrial characteristics and capital structure. The author selected three industries with totally different features as examples and discussed how their particular industrial functions can make a significant difference in leverage ratio. These industrial characteristics are only related to the industry, such as business model and financial statements structure, regardless of the firms size, business performance, and profitability, which can be calculated and measured. Using high-tech-driven, asset-intensive, and labor-intensive industries as samples to analyze their influences on firms leverage ratios. Their industry characteristics can explain the difference in leverage, as asset-intensive companies have the highest average level of debt while labor-intensive has the lowest one. However, the industries cannot account for all diversities in capital structure, and there are difficulties in discovering the perfect capital structure that can meet all requirements and has the lowest cost under current literature. It is necessary to ascertain all factors that will affect the capital structure and evaluate the extent of their influences in future research.
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