scholarly journals The Capital Structure of Russian Companies: Testing Trade-off Theory Versus Pecking Order Theory

2010 ◽  
Vol 1 (2) ◽  
pp. 17-31 ◽  
Author(s):  
Irina Ivashkovskaya ◽  
Maria Solntseva
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Theory Versus ◽  
The Capital Structure

Вопросы формирования структуры капитала в российских компаниях остаются не исследованными с позиций современной финансовой теории. В статье показаны результаты эмпирических тестов двух наиболее распространенных концепций – компромиссной и порядка выбора источников финансирования - на примере панельных данных 62 крупных российских компаний, охватывающих 9 отраслей. Исследование выполнено в рамках Научно-учебной лаборатории корпоративных финансов факультета экономики ГУ-ВШЭ как проект направления «Создание и управление стоимостью компании в новой экономике». Построенные эконометрические модели опираются на методы эмпирического анализа структуры капитала компании на растущих рынках, а также тесты данных концепций на материалах развитых рынков капитала. Выявлены детерминанты структуры капитала. Проведенные тесты и проверки на устойчивость по всей панели не позволяют отклонить ни одну из концепций. Анализ на подвыборках показал, то применительно к компаниям с высоким уровнем долга, существенно увеличиваются коэффициенты при внутреннем дефиците финансовых средств, в части регрессий становится незначимым свободный член, что позволяет считать, что им более соответствует логика концепции «порядка финансирования». Результаты показывают, что данная концепция описывает выбор структуры капитала в подвыборке компаний с государственной собственностью. Более высокая объясняющая сила этой концепции очевидна и по результатам тестирования подвыборки публичных компаний.

scholarly journals TRADE-OFF THEORY VERSUS PECKING ORDER THEORY: CAPITAL STRUCTURE DECISIONS IN A PERIPHERAL REGION OF PORTUGAL

2014 ◽  
Vol 16 (2) ◽  
pp. 445-466 ◽  
Author(s):  
Zélia Serrasqueiro ◽  
Ana Caetano
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Peripheral Region ◽  
Pecking Order ◽  
Interior Region ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Theory Versus ◽  
Internal Financing ◽  
The Capital Structure

This paper seeks to analyse whether the capital structure decisions of Small and Medium-Sized Enterprises (SMEs) are closer to the assumptions of Trade-Off Theory or to those of Pecking Order Theory. We use a sample of SMEs located in the interior region of Portugal, using the LSDVC dynamic estimator as method of estimation, the empirical evidence obtained allows us to conclude that the most profitable and oldest SMEs resort less to debt, which corroborates the forecasts of Pecking Order Theory. SMEs, with greater size, resort more to debt, corroborating the forecasts of Trade-Off Theory and Pecking Order Theory. In addition, SMEs adjust noticeably their current level of debt towards the optimal debt ratio, which corroborates what is forecast by Trade-Off Theory. Therefore, this paper enhances that Trade-Off and Pecking Order Theories are not mutually exclusive in explaining the capital structure decisions of SMEs. The results suggest that younger and smaller SMEs should be object of public financing support, when the internal financing is clearly insufficient to fund those firms’ activities.

scholarly journals Capital structure determinants of hospitality sector SMEs

2016 ◽  
Vol 23 (1) ◽  
pp. 113-132 ◽  
Author(s):  
Luís Pacheco ◽  
Fernando Tavares
Keyword(s):  
Capital Structure ◽  
Small And Medium Enterprises ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Factors Affecting ◽  
Portuguese Economy ◽  
Hospitality Sector ◽  
The Capital Structure

The main objective of this article is to study the capital structure determinants of small and medium enterprises (SMEs) in the hospitality sector and how this can influence their level of indebtedness. Using panel data methodology and considering a sample of 43 Portuguese hotels, the authors study the capital structure determinants between 2004 and 2013. The study examines the indebtedness level in light of the two main theories – the Trade-off theory and the Pecking Order theory. The hospitality sector was chosen because of its importance in the Portuguese economy and because this particular sector has hardly been studied. In addition to total indebtedness, the authors extend the literature by analysing the differences between short-term and long-term indebtedness. The results obtained suggest that profitability, assets tangibility, firm dimension, total liquidity and risk are key factors affecting the capital structure of hospitality sector SMEs, while growth, other tax benefits and age were not deemed relevant. These results allow us to conclude that Trade-off and Pecking Order theories should not be considered in isolation to explain the capital structure of hospitality sector SMEs.

scholarly journals Trade-Off Theory and Pecking Order Theory: Evidence from Real Estate Companies in Vietnam

2021 ◽  
Author(s):  
Hoang Duc Le ◽  
Nguyen Quang Viet ◽  
Nguyen Huaong Anh
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Relevant Theory ◽  
The Capital Structure

This study was implemented with the goal of testing the validity of trade-off theory and pecking order theory in determining the capital structure in 50 listed real estate companies in Vietnam. The result of this study shows that the pecking order theory is the more approriate and should be applied for the listed real estate companies in Vietnam, and be the informative document for those firms to take into account the relevant theory to adjust their own capital structure, so that they can raise their own competitiveness and continue the development of the business

scholarly journals DETERMINANTS OF CAPITAL STRUCTURE: AN EMPIRICAL EVALUATION OF OMAN’S TOURISM COMPANIES

2020 ◽  
Vol 7 (1) ◽  
pp. 01-10
Author(s):  
Syeeda Shafiya Mohammadi ◽  
Tamanna Dalwai ◽  
Dure Najaf ◽  
Ashwaq Saif Al-Yaarubi
Keyword(s):  
Capital Structure ◽  
Empirical Evaluation ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Corporate Managers ◽  
Prior Literature ◽  
Using Data ◽  
The Capital Structure

Purpose: The purpose of this research is to investigate the determinants of the capital structure of tourism companies in Oman. This study uses the trade-off theory and pecking order theory to postulate hypotheses related to determinants of capital structure. Methodology: In line with extant literature, size, liquidity, tangibility, growth opportunities, and risk are used as the determinants of the capital structure. The sample in this study includes nine listed tourism companies for the period 2007 to 2016, which aggregates to 90 firm-year observations. Main findings: The results show that the capital structure of tourism companies is influenced by size, growth, and risk. The trade-off theory and pecking order theory are useful for partially explaining the leverage decisions of Oman's tourism companies. Implications: The empirical findings of this research imply that tourism companies' corporate managers can make optimal capital structure decisions based on determinants. Novelty: To the best of the author's knowledge, this study is a first for examining the determinants of capital structure for Oman's tourism companies using data over ten years. It lends support to the determinants identified in prior literature for developed and developing countries.

scholarly journals Explanatory Factors of the Capital Structure

2020 ◽  
Vol 4 (6) ◽  
pp. 519-529
Author(s):  
Marta Silva ◽  
Luís Pereira Gomes ◽  
Isabel Cristina Lopes
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Statistical Tests ◽  
Negative Relationship ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Explanatory Factors ◽  
The Capital Structure

This paper presents an empirical study of the capital structure of Portuguese companies where the main objective is to find key explanatory factors for indebtedness decisions. The relations between indebtedness and its determinants are tested in the light of the Trade-Off Theory and the Pecking-Order Theory. The motivation of this work was to contribute to the scientific research on the influential determinants of the capital structure and to deepen the knowledge of the Portuguese market. The quantitative methodology is used, through an econometric model for panel data using accounting information of 55 Portuguese companies between 2014 and 2016. Statistical tests such as the F test, the Lagrange Multiplier Breusch-Pagan test and the Hausman test were used to identify the most appropriate method of estimation, which resulted in a panel data model with random effects for individuals. The findings of this study suggest that indebtedness have a positive relation with tangibility and the size of the company, which supports the Trade-Off Theory. However, the positive relationship with the non-debt tax benefits suggests the importance of taxes, contrary to Trade-Off Theory. The negative relationship with cash flows, coupled with the positive relationships between size and growth opportunities, suggest the use of funding only when internal funds become insufficient, supporting the Pecking-Order Theory. The general results support that both theories partially explain the financing decisions of Portuguese companies. Doi: 10.28991/esj-2020-01249 Full Text: PDF

scholarly journals DETERMINANTS OF CAPITAL STRUCTURE: AN EMPIRICAL EVALUATION OF OMAN’S TOURISM COMPANIES

2019 ◽  
Vol 6 (2) ◽  
pp. 08-17
Author(s):  
Syeeda Shafiya Mohammadi ◽  
Tamanna Dalwai ◽  
Dure Najaf ◽  
Ashwaq Saif Al-Yaarubi
Keyword(s):  
Capital Structure ◽  
Empirical Evaluation ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Corporate Managers ◽  
Prior Literature ◽  
Using Data ◽  
The Capital Structure

Purpose: The purpose of this research is to investigate the determinants of the capital structure of tourism companies in Oman. This study uses the trade-off theory and pecking order theory to postulate hypotheses related to determinants of capital structure. Methodology: In line with extant literature, size, liquidity, tangibility, growth opportunities, and risk are used as the determinants of the capital structure. The sample in this study includes nine listed tourism companies for the period 2007 to 2016, which aggregates to 90 firm-year observations. Main findings: The results show that the capital structure of tourism companies is influenced by size, growth, and risk. The trade-off theory and pecking order theory are useful for partially explaining the leverage decisions of Oman's tourism companies. Implications: The empirical findings of this research imply that tourism companies' corporate managers can make optimal capital structure decisions based on determinants. Novelty: To the best of the author's knowledge, this study is a first for examining the determinants of capital structure for Oman's tourism companies using data over ten years. It lends support to the determinants identified in prior literature for developed and developing countries.

scholarly journals Pecking Order Theory versus Trade-Off Theory: are service SMEs’ capital structure decisions different?

2011 ◽  
Vol 5 (4) ◽  
pp. 381-409 ◽  
Author(s):  
Zélia Silva Serrasqueiro ◽  
Manuel Rocha Armada ◽  
Paulo Maçãs Nunes
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Theory Versus

A Study of Determinants of Capital Structure through Panel Data Analysis of Firms Listed in NSE CNX 500

2016 ◽  
Vol 20 (4) ◽  
pp. 267-277 ◽  
Author(s):  
Barnali Chaklader ◽  
Deepak Chawla
Keyword(s):  
Capital Structure ◽  
Control Variable ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Impact ◽  
The Capital Structure

This study contributes to the capital structure literature by investigating the determinants of capital structure of firms listed in NSE CNX 500. The period of the study is 2008–2015, the period starting from the year of global slowdown. This study is an attempt to study the capital structure of firms listed in National Stock Exchange in the post liberalization period. The objectives of the study are to study the impact of independent variables such as growth, profitability, tangibility, liquidity, size and non-debt tax shield on financial leverage and also to find out whether the results are in line with the pecking order theory or the trade-off theory of capital structure. Size is taken as a control variable. Our study supports the trade-off theory for all variables such as growth, profitability, size tangibility and non-debt tax shield. Liquidity is the only independent variable that goes in accordance with the pecking order theory. Thus, this study is more inclined towards the trade-off theory.

scholarly journals The Examination of Trade Off Theory and Pecking Order Theory to Capital Structure on Plantation Companies Listed in Indonesia Stock Exchange

2021 ◽  
Vol 3 (2) ◽  
pp. 323-338
Author(s):  
Jesslyn Wijaya ◽  
Ciptawan Cen
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Order Theory ◽  
Effective Tax Rate ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Rate ◽  
The Capital Structure

Plantation is a promising sector, but just like other firms, this sector will also face the financing problem. Capital structure determines the cost of capital and the risk assumed by the firm. Trade-off and Pecking order theory are the most common theory used to determine the capital structure. The objective of this research is to examine plantation companies tend to use trade-off theory or pecking order theory in determining the capital structure decision. This research used multiple linear regression analysis methods with capital structure as the dependent variable, and the asset structure, firm size, company growth, institutional ownership, effective tax rate, and non-debt tax shield as the independent variables.This is a quantitative research that uses secondary data from financial statements of plantation companies listed in the Indonesia Stock Exchange for 2014 to 2019. The sample was determined by using the purposive sampling technique and 5 out of 21 companies fulfill the sampling requirements. This study conducted observations for 6 years with a total of 30 research samples. The results of this research are both trade-off and pecking order theory are used and still relevant in the capital structure determination. Trade-off theory exerts more influence on capital structure decisions than pecking order theory. This is confirmed by the partial T-test where firm size, institutional ownership, effective tax rate, and non-debt tax shields suggest the use of trade-off theory, only asset structure indicates the tendency of pecking order theory.  

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