After the many years of liberalization, it can be understood that the government plays an important role in the capital structure analysis of the companies. These are found to be regulated based on the financial leverages of the companies and their financial leverage. In the case of United States, there are concerns for the dash for the debt and the flight of equity. There is argument that is made for the greater risk of the financial distress. These are transference of the risks that the consumers and tax payers need to make in order to meet the financial requirements of the investment requirements. The capital structure of the companies seems to vary based on the US regulation. There is a fair return of the return on the capital in this system. In Europe, there is regulation that is used for the consideration of the return of the capital.
There is the determination of the larger extent on the firm’s capital structure that needs to be factored in this paradigm. There must be proper choosing of the capital structure and this can affect the rate and the profitability. The company’s financial health is measured by the cash flow. This cash flow is measured by the cash inflow and outflow consideration. The interest in the debt is considered to be tax deductible in some cases. These are found to impact the operation of the companies. Apart from this the political stance of the company needs to be considered. There must be factoring in of the economic stance of the nation and the overall national debt. This is found to impact the operation of the company. The ideology of the people also impacts the spending habits of the people. These are considered in the capital structure analysis. Correlation between Firm Level and Country Level variables: The descriptive statistics for the US Based companies’ various levels include revenues, tax, expenses and more.