Text

theses

ETD doctoral

Infrastructure is the cornerstone of the American economy. It underpins economic development and provides essential services. In the United States (U.S.), an estimated 2.5% of GDP (approximately $448 billion) is spent on infrastructure by both public and private organizations annually. In spite of the significant investments that has gone into infrastructural development over the decades, the American Society of Civil Engineers (2016) estimates a $2 trillion gap in infrastructure spending between 2016 to 2025, a gap that will require an additional $206 billion annually to close. Not-for-profit infrastructural enterprises are pivotal to the provision of infrastructure in the U.S. and their capital structure decisions are of crucial importance to the long term sustainability of these enterprises. Yet, little is known about the financing decisions of these enterprises. This study uses a mixed methods approach to understand the factors that determine the capital structure decisions of not-for-profit infrastructural enterprises in three sectors including water, power and transportation enterprises. Quantitative research methods are used to analyze the magnitude and direction of the relationship between the capital structure of not-for-profit enterprises (operationalized as leverage) and its determinants. In addition, this study uses case studies and interviews with key finance decision makers in power, water and transportation enterprises to understand the factors influencing capital structure decisions in practice and assess the extent to which the findings provide support for existing capital structure theories. This study identified seven firm attributes as the key determinants of leverage. They include: profitability, size, tangibility of assets, age of plant, growth, liquidity and risk. The regression analysis suggests that more profitable infrastructural enterprises prefer using retained earnings to debt financing, and larger infrastructural enterprises are more reliant on debt financing than smaller firms. The qualitative study revealed that the most important factors considered by key financial managers of not-for-profit infrastructural enterprises when choosing the capital structure of the firm are financial flexibility and maintaining high credit ratings. The findings of this study hold lots of public policy implications; the most notable is the need to preserve the tax-exempt municipal finance market as a crucial financing option available to not-for-profit infrastructural enterprises in the U.S.

ETD_8907

doi:10.7282/T3DR2ZXV

Ph.D.

Includes bibliographical references

by Olugbenga Sonola

The author owns the copyright to this work.