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Korean Journal of Financial Studies 2015;44(2):373-412.
Published online April 30, 2015.
Determinants of Capital Structure: Static Trade-Off Theory vs. Pecking Order Theory
Bu Min Kim, Yu Kyung Lee, Eun Jung Lee
한국 상장기업의 자본구조에 관한 재고찰
김부민, 이유경, 이은정
Abstract
This paper examines whether the static trade-off theory or the pecking-order theory prevails in capital structure decisions when taking into account a firm’s current debt ratio, debt capacity, information asymmetry, agency problem, and growth opportunities. In particular, we investigate the determinants of capital structure focusing on the situation where a firm’s current debt ratio is above its target debt ratio but below the debt capacity. We find that both the static trade-off theory and pecking order theory seem to perform very well if the leverage ratio exceeds the estimated target of the company. However, the results are changed when a firm’s debt ratio is currently above its target debt ratio. If a firm’s current debt ratio is above its target ratio and above the debt capacity, the result is in line with the predictions of the pecking order theory. On the other hand, if the leverage ratio is above its target ratio but below the debt capacity, we support the static trade-off theory. Finally, we examine whether information asymmetry, agency problem, and growth opportunity account for a firm’s debt-equity decisions. Our empirical results do not show the significance of these variables. It suggests that the current debt ratio, the estimated target debt ratio, and debt capacity may play a important role in explaining capital structure decision.
Key Words: 목표부채비율,부채수용력,상충관계이론,자본구조,자본조달순위이론,Capital Structure,Debt Capacity,Pecking Order Theory,Target Debt Ratio,Trade-Off Theory
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