Testing Static Tradeoff against Pecking Order Models of Capital Structure in Brazilian Firms

Otavio De Medeiros () and Cecilio Daher

Finance from University Library of Munich, Germany

Abstract: We test two models with the purpose of finding the best empirical explanation for the capital structure of Brazilian firms. The models tested were developed to represent the Static Tradeoff Theory and the Pecking Order Theory. The sample consists of firms listed in the Sao Paulo (Brazil) stock exchange from 1995 through 2002. By using panel data econometric methods, we aimed at establishing which of the two theories has the best explanatory power for Brazilian firms. The analysis of the outcomes led to the conclusion that the pecking order theory provides the best explanation for the capital structure of those firms.

Keywords: capital structure; pecking order; static tradeoff; Brazilian firms (search for similar items in EconPapers)
JEL-codes: G (search for similar items in EconPapers)
Pages: 15 pages
Date: 2004-12-15
Note: Type of Document - pdf; pages: 15
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0412019

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