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Gauging a Firm's Financing Orientation : Integrating Predictions of the Trade-Off Theory, the Pecking Order Model, and the Market Timing Hypothesis

Wu, Shanhong - 2011

After critiquing arguments and evidence associated with the trade-off theory, the pecking order model, and the market …

Persistent link: https://www.econbiz.de/10013128573

The Relevance of External Credit Ratings in the Capital Structure Decision-Making Process

Michelsen, Marc - 2012

This paper empirically examines the relevance of external credit ratings in the capital structure decision-making process with regard to an international firm sample. Using the rating outlook to measure the imminence of a rating change, allows us to test managers' ex-ante capital structure...

Persistent link: https://www.econbiz.de/10013113516

Pecking Order Versus Trade Off Theory and the Issue of Debt Constraint Problem?

Vigneron, Ludovic - 2012

particularly on a sample of French quoted firms. The question is which one of pecking order or trade off theory can be considered … theory dominates pecking order for constrained firms whereas pecking order dominates trade off theory for unconstrained ones … difficult to distinguish which theory better fits …

Persistent link: https://www.econbiz.de/10013101235

Firm Financing Choices in a Thin, Capital Constrained Market

Smith, David J. - 2012

This paper examines the financing choices made by New Zealand firms and the factors that influence those choices over the period 1984 to 2009. New Zealand firms are faced with relatively thin capital markets that lack scale and participation. The paper therefore provides an alternative...

Persistent link: https://www.econbiz.de/10013103458

Lo and Behold! Modigliani & Miller's Homemade Leverage Proof is a Fallacy

Dayala, Roger - 2013

This article challenges Modigliani & Miller's (M&M) Famous Homemade Leverage Proof. The M&M proof suggests that since in efficient markets any value impact from leverage results in a homemade arbitrage opportunity, leverage must be value neutral. However, through the uncontroversial notion of...

Persistent link: https://www.econbiz.de/10013085846

The Cost of Capital and Optimal Financing Policy in a Dynamic Setting

Karpavicius, Sigitas - 2014

This paper revisits the Modigliani-Miller propositions on the optimal financing policy and cost of capital in a dynamic setting. In an environment without taxes and bankruptcy costs, the results are generally consistent with Modigliani and Miller Propositions 1 and 2. However, the first...

Persistent link: https://www.econbiz.de/10013064539

International pecking order

Eren, Egemen; Malamud, Semyon; Zhou, Haonan - 2022

We document that corporates in emerging markets borrow more in foreign currency when the local currency provides a better hedge in downturns. We develop an international corporate finance model in which firms facing adverse selection choose the foreign currency share of their debt. In the unique...

Persistent link: https://www.econbiz.de/10013168799

An Application of the Two-Stage Bivariate Probit-Tobit Model to Corporate Financing Decisions

Cotei, Carmen - 2009

size of issue support the predictions of trade-off theory. The pecking order's prediction that, if external funding is …

Persistent link: https://www.econbiz.de/10013156063

Empirical Test of Pecking Order Theory for the US Listed Firms

Abdullazade, Zaur - 2020

This paper is aimed at examining the appropriateness of pecking order theory in the US financial market. One of the … most popular models of firm's capital structure driven by asymmetric information is the pecking order theory (POT) of Myers …

Persistent link: https://www.econbiz.de/10012836138

International Bank Lending and Corporate Debt Structure

Serena, José María - 2020

Using a cross-country sample of bank-dependent public firms we study the international spillovers of a change in banking regulation on corporate borrowing. For identification we examine how US firms' liabilities vis-à-vis banks, non-bank lenders and bond markets evolve after an increase in...

Persistent link: https://www.econbiz.de/10012836875

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