de Jong, Abe; Verbeek, Marno; Verwijmeren, Patrick - In: Journal of Banking & Finance 35 (2011) 5, pp. 1303-1314
This paper tests the static tradeoff theory against the pecking order theory. We focus on an important difference in prediction: the static tradeoff theory argues that a firm increases leverage until it reaches its target debt ratio, while the pecking order yields debt issuance until the debt...