A key theme in corporate finance has been the study of the main factors that affect the financing decisions of firms. In this paper we examine the following two hypotheses which traditional theories of capital structure are relatively silent about: (i) the determinants of capital structure are different for micro, small, medium and large firms; and (ii) the factors that determine whether or not a firm issues debt are different from those that determine how much debt it issues. Using a binary choice model to explain the probability of a firm raising debt and a fractional regression model to explain the amount issued, we find strong support for both hypotheses. Nevertheless, the pecking-order theory seems to be suitable to describe the capital structure choices made by all size-based groups of firms
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number
9_2006.
Find related papers by JEL classification: C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
This paper has been announced in the following NEP Reports:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)