French firm's financing choices: towards a reconciliation of the static trade-off theory and the pecking order theory?
AbstractThe main purpose of this study is to examine the validity of the static trade-off theory and the pecking order theory using a French panel data. Our empirical tests provide that we can not formally reject either of the two theories explaining financing behavior. However, they confirm the importance of considerations provided by the static trade-off theory. On the contrary, when we combine the adjustment model and the pecking order model we find that the statistical power of the hierarchical model is improved and the choice of financing of French firms confirms the greatest explanatory power of the pecking order hypotheses.
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Date of creation: 04 Jan 2012
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Publication status: Published - Presented, Global Economics, Finance and Management Conference, 2011, TORONTO, Canada
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capital structure; trade-off theory; pecking order theory;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-13 (All new papers)
- NEP-CFN-2011-07-13 (Corporate Finance)
- NEP-INT-2011-07-13 (International Trade)
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