Abstract
The finance literature offers two major models about the capital structure of a firm. In the tradeoff model, firms tradeoff the costs and benefits of borrowing to identify their optimal capital structure and gradually move towards it. On the contrast, firms do not have an optimal capital structure in the pecking order model. The moving of the capital structure is simply the result of the financing hierarchy: retained earnings, safe debt, risky debt, and finally equity.
The purpose of this study is to test whether the public firms in Taiwan have optimal capital structure. We address the question with cross-section regressions. If the tradeoff exists, moving towards the optimal capital structure will explain the change of capital structure. On the other hand ,the deficit-in funds¡]DEF¡^will explain the change of capital structure when the pecking order model exists.
The empirical result shows that the public firms in Taiwan have optimal capital structure, and their realized capital structures are moving towards it, but the speed of adjustment is quite slow.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0711101-141653 |
| Date | 11 July 2001 |
| Creators | Chen, Shaui-Wen |
| Contributors | Jen-Jsung Huang, Victor Liu, Anlin Chen |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0711101-141653 |
| Rights | campus_withheld, Copyright information available at source archive |
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