search query: @author Shyam-Sunder, L. / total: 1
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| Author: | Shyam-Sunder, L. Myers, S. C. |
| Title: | Testing static tradeoff against pecking order models of capital structure. |
| Journal: | Journal of Financial Economics
1999 : FEB, VOL. 51:2, p. 219-244 |
| Index terms: | Capital structure of companies Financial management Financial market trading |
| Freeterms: | Pecking order theory Static tradeoff theory |
| Language: | eng |
| Abstract: | The authors test traditional capital structure models against the alternative of a pecking order model of corporate financing. They find that the basic pecking order model, which predicts external debt financing driven by by the international financial deficit, has much greater imeseries explanatory power than a static tradeoff model, which predicts that each firm adjusts gradually toward an optimal debt ratio. The study shows that the tests have the power to reject the pecking order against alternative tradeoff hypotheses. The statistical power of some usual tests of the tradeoff model is virtually nil. |
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