Capital Structure of Portuguese Service Industries: A Panel Data Analysis

Paulo J. Maçãs Nunes and Zelia Serrasqueiro ()

The Service Industries Journal, 2007, vol. 27, issue 5, 549-562

Abstract: Using panel data for the period 1999--2003, this study shows that internal and external financing are not perfect substitutes, not corroborating the theorem of Modigliani and Miller. Portuguese service industries prefer internal to external financing, corroborating Pecking Order theory. The bigger the size of the company, the greater the level of debt, corroborating Trade-Off and Signalling theories. The negative relationship between the amount of fixed capital and debt corroborates Agency theory. The results allow us to conclude that debt contributes to improving management efficiency, agency problems between shareholders and creditors having little relevance.

Date: 2007
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DOI: 10.1080/02642060701411690

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The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi

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