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Factors that Determine the Capital Structure: An Empirical Study on Low-cost Airlines

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  • Kasım Kiracı
  • Nurhan Aydin

Abstract

The purpose of this study is to identify the factors that determine the capital structure of low-cost airlines. Accordingly, it is aimed to test the factors that determine the capital structure in low-cost airlines in the context of capital structure theories. In the study, 15 airline companies, which had continuous financial data during the 2004-2015 period, were examined empirically. Panel data analysis was used as a method in the study. Findings of the study show that low-cost airlines generally operate based on the trade-off theory while borrowing in the short-term and based on the pecking order theory while borrowing in the long-term. JEL Codes - G32; L93; C23

Suggested Citation

  • Kasım Kiracı & Nurhan Aydin, 2018. "Factors that Determine the Capital Structure: An Empirical Study on Low-cost Airlines," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 65(3), pages 227-246, September.
    • Handle: RePEc:aic:saebjn:v:65:y:2018:i:3:p:227-246:n:112
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    References listed on IDEAS

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    More about this item

    Keywords

    low-cost airlines; Pecking order theory; trade-off theory; panel data analysis;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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