Testing Static Tradeoff against Pecking Order Models of Capital Structure in Brazilian Firms
AbstractWe test two models with the purpose of finding the best empirical explanation for the capital structure of Brazilian firms. The models tested were developed to represent the Static Tradeoff Theory and the Pecking Order Theory. The sample consists of firms listed in the Sao Paulo (Brazil) stock exchange from 1995 through 2002. By using panel data econometric methods, we aimed at establishing which of the two theories has the best explanatory power for Brazilian firms. The analysis of the outcomes led to the conclusion that the pecking order theory provides the best explanation for the capital structure of those firms.
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Length: 15 pages
Date of creation: 15 Dec 2004
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capital structure; pecking order; static tradeoff; Brazilian firms;
Find related papers by JEL classification:
- G - Financial Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-20 (All new papers)
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