European Journal of Finance · 2008 · 26 citations · 44 references
ManagementEconomicsFinanceCapital StructureCorporate FinanceFinancial EconomicsCapital FinancingCapital Structure AnalysisCapital Structure DeterminantsCapital Structure TheoryFinancing DecisionsPecking Order TheoryCapital Structure Choice Under Asymmetric InformationCorporate Financing BehaviorPanel Data EstimationPanel Data RegressionPanel Data SpecificationPecking Order Empirical TestsReduced Form EquationsStatic Trade-off Theory
This study investigates the determinants of capital structure for a sample of 22 firms listed on the Nairobi Stock Exchange during the period 1991–1999. Reduced form equations derived from the static trade-off model and the pecking order hypothesis are estimated and tested using panel data techniques. The results show that a pecking order model with an adjustment process cannot be rejected. Specifically, it is found that the main determinants of capital financing behaviour consist of information asymmetries, non-debt tax shields and local capital market infrastructure.
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