Financing Preferences of Spanish Firms: Evidence on the Pecking Order Theory

Sánchez-Vidal, Javier; Martín‐Ugedo, Juan Francisco

doi:10.1007/s11156-005-5459-6

Cited by 47 publications

(22 citation statements)

References 26 publications

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“…If Pecking Order Theory holds, retained earnings are the preferred source of financing and equity issues the least preferred. Thus, following Watson and Wilson (2002) and Sánchez-Vidal and Martín-Ugedo (2005) …”

Section: Pecking Order Theory Modelsmentioning

confidence: 99%

Capital structure decisions: old issues, new insights from high-tech small- and medium-sized enterprises

Serrasqueiro

Nunes

Armada

2014

The European Journal of Finance

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Using panel data models and this study analyses the capital structure decisions of high-tech small-and medium-sized enterprises (SMEs) and non-high-tech SMEs. The results suggest that the capital structure decisions of high-tech SMEs are closer to what is predicted by the Pecking Order Theory. However, the results also suggest a modified version of the Pecking Order Theory for high-tech SMEs that have relied on venture capital. These firms prefer equity issues to debt, when internal finance is exhausted. The empirical evidence suggests that problems relating to information asymmetry as well as technological and market uncertainty influence the capital structure decisions of high-tech SMEs.

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Section: Pecking Order Theory Modelsmentioning

confidence: 99%

Capital structure decisions: old issues, new insights from high-tech small- and medium-sized enterprises

Serrasqueiro

Nunes

Armada

2014

The European Journal of Finance

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“…The main results are: i) the hypothesis about equity is not confirmed, because older firms tend to have higher equity values, caused by the increasing reserves; ii) risk of the firm decrease with age. Also, López-Gracia and Aybar-Arias (2000) and Sánchez-Vidal and Martín-Ugedo (2005) empirically test the pecking order theory with samples of Spanish firms. decisions because their access to appropriate external sources of capital is limited.…”

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confidence: 99%

Like milk or wine: Does firm performance improve with age?

Coad

Segarra‐Blasco²,

Teruel³

2013

Structural Change and Economic Dynamics

254

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ABSTRACT:Our empirical literature review shows that little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. For Spanish manufacturing firms, we analyse the firm performance related to firm age between 1998 and 2006. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity.

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“…The research on the determinants of capital structure has provided a wide range of factors that combine the effects of trade-off theory, pecking order theory and free cash flow theory (Chen and Kim 1979;Myers 2001;Sánchez-Vidal and Martin-Ugedo 2005). This research has been oriented to determine the factors that matter (or do not matter) in explaining variations in firms' capital structure (Miller 1988).…”

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confidence: 99%

Modeling capital structure decisions in a transition market: empirical analysis of firms in Egypt

Eldomiaty

Ismail

2008

Rev Quant Finan Acc

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It has been realized that none of the three basic theories of capital structure presents a complete answer to the actual determinants of corporate financing decisions. This study attempts to model the practice of capital structure decisions according to the basic premises of each theory of capital structure: trade-off theory, pecking-order theory and free cash flow theory. The methodology addresses modeling long-term and short-term debt financing decisions based on ten different statistical criteria using data from Egypt stock market. The empirical evidence indicates that four models of corporate financing are influenced by the trade-off theory relatively. The contributions of this paper are as follows. First, this study offers a more refined and comprehensive methodology for modeling firms' capital structure decisions. Second, the results of this study compare to those of previous studies of other developing countries and thus add an element of external validity.

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Financing Preferences of Spanish Firms: Evidence on the Pecking Order Theory

Cited by 47 publications

References 26 publications

Capital structure decisions: old issues, new insights from high-tech small- and medium-sized enterprises

Capital structure decisions: old issues, new insights from high-tech small- and medium-sized enterprises

Like milk or wine: Does firm performance improve with age?

Modeling capital structure decisions in a transition market: empirical analysis of firms in Egypt

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