The Determinants of Capital Structure of High-Tech Firms: How Crises Affect the Choice of Firm’s Financing

Given the dynamic transformations in various business areas, forming an ideal capital structure is crucial for competitive advantage and business development. This study examines the factors influencing the capital structure of high-tech companies from the USA, China, the UK, and Japan, using panel data. These countries are among the most high-tech according to the Global Innovation Index (GII). Special attention is paid to the presence of a target debt level and the ability of companies to adapt to it in case of deviation. The work also formalizes the theory of financial flexibility and analyzes the impact of financial restrictions, macroeconomic conditions, and economic cycles on the speed of capital structure adaptation. Using a dynamic partial adjustment model tested via Generalized Method of Moments (GMM), the analysis conducted for various subgroups revealed that companies with financial constraints and inflexibility adapt more slowly compared to others. The study also identified different behaviors among companies with zero and non-zero debt. Companies with non-zero leverage consistently adapt to the target level, but during crisis periods, they increase the speed of adaptation due to high deviation costs. Companies with zero debt demonstrate significantly lower adaptation speed in non-crisis periods but also increase it during crises. It is assumed that companies with zero debt find it easier to change their capital structure and financing methods during crises due to the absence of high deviation costs, allowing them to take advantage of new opportunities and access alternative financing sources. In contrast, levered companies increase their adaptation speed during crises to maintain business operations and overcome bankruptcy risks. Thus, the study proposes possible strategies for behavior and financing for zero-debt companies in crisis conditions, showing that unfavorable times can become a stimulus for their development.