Purpose This study aims to investigate how firms’ positions within global semiconductor value chains shape their capital-structure decisions under varying institutional environments. It aims to clarify whether leverage is primarily determined by supply chain role, integration scope or institutional quality. Design/methodology/approach Using an unbalanced panel of 496 listed semiconductor firms across 26 countries from 2004 to 2022, we combine fixed-effects, correlated random effects and dynamic panel estimations. The analysis incorporates firm-level financial data and sector classifications. A two-step system generalized method of moments estimator is employed to mitigate endogeneity arising from leverage persistence, reverse causality and omitted variables. Robustness checks include alternative leverage definitions, winsorized samples and variance inflation factor diagnostics. Findings Functional specialization, rather than regional context or integration level, emerges as the primary determinant of leverage. Upstream firms exhibit significantly higher debt ratios than midstream counterparts, consistent with trade-off theory and capital-intensity arguments. The dynamic model confirms that leverage is persistent over time, while East Asian firms display lower leverage – suggesting that institutional support increasingly operates through equity participation and public investment rather than debt financing. Research limitations/implications Future research should explore instrumental-variable or matching designs and extend institutional measures to include policy-level and subregional indicators. Originality/value The study bridges corporate finance and global value chain research by integrating institutional quality into a dynamic, role-based model of capital structure. It demonstrates that supply chain position and institutional conditions jointly explain financial heterogeneity in high-technology industries.
T. Sato (Mon,) studied this question.