The Static Trade-Off against the Pecking Order Hypotheses of Firms’ Capital Structure: A Survey of Testing Methodology and Proxy Variable

Andriansyah Andriansyah

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a literature review on some proxy variables and methodologies that can be used to test two competing hypotheses on capital structure, namely the static trade-off and the pecking order hypotheses. The choice of proxy variables and methodology of research are very important in testing the hypotheses: the empirical results heavily depend on the choice. Some discussions will be presented on the choice of several important variables and their corresponding proxies. Meanwhile, some methodologies and statistical models such as sampling survey, multiple regressions, two-step regressions, co-integration, logit, probit and latent variable approach are also discussed. A mean reversion model may be used to test the static trade-off hypothesis, while co-integration analysis may be utilised to test the pecking order hypothesis.

Keywords: capital structure; static trade-off hypothesis; pecking order hypothesis (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2009-03-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Jurnal Keuangan dan Perbankan 11.1(2017): pp. 75-88

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/105411/1/MPRA_paper_105411.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105411

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().