Trade-Off vs. Pecking Order Theory: Panel Data Approach
DOI:
https://doi.org/10.33516/rb.v49i4.131-139pKeywords:
Panel Data Analysis, Business Risk, Growth Rate, ProfitabilityAbstract
In this study, an attempt has been made to investigate any significant changes in variables influencing the capital structure decisions among selected companies from Nifty-50 Index. The financing behaviour of the companies are explained by using Panel data analysis – fixed and random effects. As per the analysis, it is observed that Business Risk, Growth Rate, Profitability, Size (log assets) and Size (log sales) are the significant variables influencing the capital structure over the study period. Finally, the study concludes that neither the pecking order theory nor the trade-off theory fully explains the determinants of capital structure for the selected companies.
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