Capital Structure Theories: Evidence from CEE Markets
|Author:||Mgr. Zuzana Bumbálková|
|Year:||2009 - summer|
|Leaders:|| prof. Ing. Oldřich Dědek CSc.
|Work type:|| Finance, Financial Markets and Banking
|Awards and prizes:|
|Abstract:||The objective of the thesis is two-fold. First, it is to provide an overview of the work that has been done in the literature regarding corporate financing patterns and capital structure. The research has gone a long way since the famous irrelevance proposition by Miller & Modigliani in 1958. The central focus is given to the pecking order and its competition with what is probably the most widely accepted capital structure theory – the trade-off theory. Nevertheless, alternative theories are presented (theories based on agency costs, market timing or inertia).
In the second part, the theories, hypotheses and ideas presented above are tested on the Central & Eastern European (CEE) data for the reason that so far, they have been almost ignored in the mainstream research. The first conclusion is that corporate financing patterns are similar to those found in countries with long tradition of developed financial markets. As strong evidence for both the trade-off and the pecking order theories is found, the thesis supports the very recent trend in the literature to integrate them instead of making them compete.