The determinants of the capital structure of listed on stock market non-financial firms: Evidence for Portugal

Nelson Vergas (), António Cerqueira () and Elísio Brandão ()
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Nelson Vergas: Barclays Bank PLC
António Cerqueira: FEP-UP, School of Economics and Management, University of Porto
Elísio Brandão: FEP-UP, School of Economics and Management, University of Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: The capital structure of companies has given rise to many works of analysis of its determinants. The research has evaluated the relevance of the determinants of managers’ options when making a decision on the type of financing. The present study evaluates the effects on debt, of the determinants of capital structure, developed by the four main schools of thought in this field: the trade-off theory, pecking order theory, agency costs theory and the market timing theory. The sample consisted of the Portuguese non-financial companies listed on Euronext Lisbon index over the period 2005 to 2012. There were used the panel data and were estimated the models with fixed effects. The determinants analyzed were, namely, tangibility, profitability, other sources of tax optimization, growth opportunities, size and market valuation. Empirical results demonstrate the ability of profitability (-), growth opportunities (+), and other sources of tax optimization (+) in explaining the debt. These results highlight the presence of the postulated by the pecking order theory. Additionally, it is evident that there are significant changes in the determinants of market valuation, growth opportunities and tangibility, as result of the 2008 financial crisis.

Keywords: Capital Structure, Panel Data, Pecking Order Theory; Trade-off theory; Agency Costs Theory, Market Timing Theory (search for similar items in EconPapers)
JEL-codes: C33 G32 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-03
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