This study investigates whether capital structure in international joint ventures conforms to the norms of dominant partners, follows the local norms, or has mixtures of local and foreign norms, or varies to exploit economic opportunities and firm specific advantages. The results of this study show that it follows neither local nor foreign norms. Factors such as industry classification, size, tax rate and years of establishment are not significant determinants of capital structure, either. Percentage of foreign owned equity and profitability are significant factors. Importance of ownership and profitability seems to suggest that firm specific or environmental variables play an important role in deciding capital structure in international joint ventures.

• Jong Shik Kim