The Pecking Order, Trade-off, Signaling, and Market-Timing Models

Miglo, Anton (2011) The Pecking Order, Trade-off, Signaling, and Market-Timing Models. In: Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practice. Robert W. Kolb Series . Wiley, pp. 171-190. ISBN 978-0-470-56952-8

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The financial crisis of 2008-2009 forced financial economists to look critically at capital structure theory because the problems faced by many companies stemmed from their financing policies. This chapter surveys four major capital structure theories: trade-off, pecking order, signaling, and market timing. These theories directly relate to asymmetric information, agency problems, taxes, and bankruptcy costs. For each theory, a basic model and its implications are presented. These implications are compared to the available research evidence. This is followed by an overview of pros and cons for each theory. A discussion of major recent papers and suggestions for future research are provided.

Item Type: Book Section
Date: 2011
Subjects: N100 Business studies
N200 Management studies
N300 Finance
Divisions: Faculty of Business, Law and Social Sciences > Birmingham City Business School > Department of Accounting, Finance and Economics
Depositing User: Anton Miglo
Date Deposited: 21 Aug 2018 07:59
Last Modified: 21 Aug 2018 07:59

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