Work

Is There Optimality in Firm's Capital Structure?: An Empirical Study

Year: 2009

Type: preprint

Abstract: The paper reports that, when firms follow the Pecking Order Theory, a sub-optimality with the cost components of firms’ capital structure exists. The sub-optimality drives firms to follow the Trade-Off Theory to reach optimality concerning the cost components of capital structure. At higher Ltd/Eq. ratios firms follow the Pecking Order financing and subsequently change the capital structure due to the interplay of profitability, cost of financing and influence of financing on profitability.

Source: SSRN Electronic Journal

Authors: Santanu Kumar Ghosh, Paritosh Chandra Sinha

Institution: University of Burdwan

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2220894089

Cites: 36

Cited by: 2

Related to: 10