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Tests of optimal capital structure theory and pecking order theory using a binomial approach- a study of Swedish firms

Wahlberg, Emily and Ekeroth, Kent (2006)
Department of Business Administration
Abstract
This master thesis concerns whether Swedish non-financial listed firms act in accordance with the optimal capital structure theory and/or pecking order theory. The examined period is 1998-2004 and we discover that Swedish companies neither follow optimal capital structure theory nor pecking order theory. From our results we conclude that there exists no single point of the capital structure which is optimal. Rather it seems as if the optimal point lies in-between an interval from 0 to the industry average, where firms tend to be indifferent to their debt-ratios. Our results show that Swedish companies prefer internal financing followed by equity and as last choice debt issuance.
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author
Wahlberg, Emily and Ekeroth, Kent
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Optimal capital structure theory, Pecking order theory, debt-ratio, financial decisions, Sweden, Management of enterprises, Företagsledning, management
language
Swedish
id
1349597
date added to LUP
2006-05-15
date last changed
2012-04-02 15:58:38
@misc{1349597,
  abstract     = {This master thesis concerns whether Swedish non-financial listed firms act in accordance with the optimal capital structure theory and/or pecking order theory. The examined period is 1998-2004 and we discover that Swedish companies neither follow optimal capital structure theory nor pecking order theory. From our results we conclude that there exists no single point of the capital structure which is optimal. Rather it seems as if the optimal point lies in-between an interval from 0 to the industry average, where firms tend to be indifferent to their debt-ratios. Our results show that Swedish companies prefer internal financing followed by equity and as last choice debt issuance.},
  author       = {Wahlberg, Emily and Ekeroth, Kent},
  keyword      = {Optimal capital structure theory,Pecking order theory,debt-ratio,financial decisions,Sweden,Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Tests of optimal capital structure theory and pecking order theory using a binomial approach- a study of Swedish firms},
  year         = {2006},
}