DOI QR코드

DOI QR Code

Determinants of Financing Decisions of the KOSDAQ Firms

코스닥 기업의 자본조달 결정요인

  • Received : 2011.10.11
  • Accepted : 2011.12.13
  • Published : 2011.12.31

Abstract

This study performed empirical analyses of the static trade-off theory and the pecking order theory which explain financing behavior of firms. The results of regression analyses using the data of 762 listed non-financing firms on the KOSDAQ market from 2000 to 2010 have shown mixed evidences supporting either the trade-off theory or the pecking order theory. Specifically, as the effective tax rate and the firm size increases, debt ratio increases, which is consistent with the trade-off theory. However as the growth opportunity and the profitability increases, debt ratio decreases, which is consistent with the pecking order theory.

Keywords

Capital Structure;Financing;Static Trade-off theory;Information Asymmetry;Pecking Order Theory;KOSDAQ;Small and Medeum Sized Firm

References

  1. Asquit, P. & Mullins Jr., D.W., "Equity Issues and Offering Dilution," Journal of Financial Economics, 15, 61-89, 1986. https://doi.org/10.1016/0304-405X(86)90050-4
  2. Booth, L., Aivazian, V.A. Demirguc-Kunt & V. Maksimivic, "Capital Structure in Developing Countries," Journal of Finance, 56, 87-130, 2001. https://doi.org/10.1111/0022-1082.00320
  3. Chrinko, Robert S. & Anuja R. Singha, "Testing Static Tradeoff against Pecking Order Models of Capital Structure: A Critical Comment," Journal of Financial Economics 58, 417-425, 2000. https://doi.org/10.1016/S0304-405X(00)00078-7
  4. Fama, Eugene & Kenneth R. French,"Testing Trade-off and Pecking Order Predictions about Dividends and Debt," Review of Financial Studies 15, 1-33, 2002. https://doi.org/10.1093/rfs/15.1.1
  5. Frank, Murray Z. & Vidhan K. Goyal, "Testing the Pecking Order Theory of Capital Structure," Journal of Financial Economics 67, 217-248, 2003. https://doi.org/10.1016/S0304-405X(02)00252-0
  6. Helwege, J. and N. Liang, "Is There a Pecking Order? Evidence from Panel of IPO Firms," Journal of Financial Economics 40, 429-458, 1996. https://doi.org/10.1016/0304-405X(95)00851-5
  7. Kim, H., A. Heshmati, and D. Aoun, "Dynamics of Capital Structure: The Case of Korean Listed Manufacuring Companies," Asian Economic Journal, Vol. 20, No. 3, 275-302, 2006. https://doi.org/10.1111/j.1467-8381.2006.00236.x
  8. Kim, Kyu-Hyung, "Effects of Financing on the Capital Structure and Investment Behavior," Korea Institute of Finance Research Report No. 2, 1993,
  9. Kim, Seong-Min & Eunmo Lee, "Analysis of Financing and Operating Structure of Korean Firms," Monthly Report of Research and Statistics of Bank of Korea ,1990.
  10. Myers, S. C. & N. S. Majluf, "Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have," Journal of Financial Economics 13, 187-221, 1984. https://doi.org/10.1016/0304-405X(84)90023-0
  11. Ross, S., "The Determination of Financial Structure: the Incentive Signaling Approach," The Bell Journal of Economics 8, 23-40, 1977. https://doi.org/10.2307/3003485
  12. Sefert, Bruce & Halit Gonenc, "Pecking Order Behavior in Emerging Market," Journal of International Financial Management and Accounting, Vol. 21, Issue 1, 1-31, 2010. https://doi.org/10.1111/j.1467-646X.2009.01034.x
  13. Shyam-Sunder, L. & S. C. Myers, "Testing Static Tradeoff against Pecking Order Models of Capital Structure," Journal of Financial Economics 51, 219-244, 1999. https://doi.org/10.1016/S0304-405X(98)00051-8
  14. Son, Seung-Tae & Yoon-Goo Lee, "Determinants of Capital Structure in KOSDAQ Firms," Korean Journal of Financial Management, Vol. 24, No. 1, 2007, 109-147.
  15. Son, Seung-Tae & Pan-Do Son, "Dynamics of Capital Structure of Listed Korean Firms," Korean Journal of Financial Management, Vol. 19, No. 6, 2459-2484, 2006.
  16. Titman, S. & R. Wessels, "The Determination of Capital Structure Choice," Journal of Finance, 43 (1), 1-19, 1988. https://doi.org/10.2307/2328319
  17. Yoon, Bong-Han, "Long Term Analysis on the Determinants of Capital Structure of the Listed Korean Firms: Comparison between the Static Trade-off Model and the Pecking Order Model,", Korean Management Review, Vol. 34, No. 4, 973-1000, 2005.
  18. Yoon, Soon-Suk, "Cash from Operations, Source of Cash Requirements and Financing Policy," Korean Management Review 32, 203-231, 2003.