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Pecking Order Theory in Determining The Capital Structure: A Panel Data Analysis Of Companies in Turkey

Author

Listed:
  • Onatca Engin, Sefika Nilay

    (Cag University)

  • Unver Erbas, Cansu

    (Loughborough University)

  • Sokmen, Ahmet Gokhan

    (Cag University)

Abstract

Capital structure decisions are an important issue that should be emphasized in order to enable enterprises to continue their activities and grow in a healthy manner. The purpose of this study is determining the capital structure and evaluating which capital structure theory fits the firms' attitude. Knowing the characteristics of the determinants of capital structure and how they affect the capital structure will enable capital structure decisions to be taken more effectively. For this purpose, panel data analysis was carried out by using the balance sheets and income statements data of 186 manufacturing companies, whose shares are traded in İstanbul Stock Exchange between the years 2009-2016. The results of the analysis indicate that firms firstly use internal funds. External funds are used only when internal funds are insufficient. The results of the analysis show that these firms’ attitudes are fit with the pecking order theory.

Suggested Citation

  • Onatca Engin, Sefika Nilay & Unver Erbas, Cansu & Sokmen, Ahmet Gokhan, 2019. "Pecking Order Theory in Determining The Capital Structure: A Panel Data Analysis Of Companies in Turkey," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 10(3), pages 687-698, May.
    • Handle: RePEc:ris:buecrj:0415
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    More about this item

    Keywords

    Capital structure; Pecking Order Theory; Target Debt Ratio; Panel Data Analysis; Manufacturing Companies;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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