Space Exploration and Capital Structure: An Evolving Financial Paradigm

Abstract

The paper analyzes the determinants of capital structure (CAP) for 87 firms globally involved in tourism and outer space from 2010 to 2023. The data is collected from the Wall Street Journal Website for dependent and independent firm-level variables and from the World Development Indicators (WDI) for macroeconomic variables. The model of pooled ordinary least squares (POLS) and panel data estimation, implemented via feasible generalized least squares (FGLS), is used to examine the capital structure behavior of businesses involved in space exploration and space travel worldwide. The results obtained using size (SIZE) and current assets (CAS) positively affect capital structure (CAP). Inflation (INF), with a positive interaction, helped companies obtain funds at low cost and increase capital. Exchange rate (EXR) has a negative impact on cash flow and leverage effects. The study highlights capital structure, regulations, and decision-making for commercializing space tourism and exploration. The paper's originality lies in the authors' exploration of the determinants of capital structure in the outer space travel and exploration industry, working across the world. The sector is a niche market but a relatively less-studied one in finance, focusing on the edge of borderline economies. Using a contextual approach, the research provides fresh insights into how firms manage financing amid firm-level and macroeconomic variables.