Using the Panel Study of Entrepreneurial Dynamics, we study if the problems of asymmetry and opacity of information, asset specificity, agency problem and signaling theory predict the financial structure at inception. Thus, we conduct a study in two steps. First, by analyzing the descriptive statistics, we find that novice entrepreneurs turn first to internal sources of finance. Then, they appl...

The pecking order theory of capital structure is one of the most influential theories of corporate finance. The purpose of this study is to explore the most important factors on a firm’s capital structure by pecking-order theory. Hierarchical regression is used as the analysis model. This study examines the determinants of debt decisions for 305 Taiwan electronic companies that are quoted on th...

This paper reports a new test of capital structure theories using a filtering technique to identify large investment projects. Contrary to the results of aggregate studies, firms respond to investment spikes by raising la rge amounts of external finance. Large firms raise debt finance and small firms issue new equity. These results run counter to predictions of the pecking order theory. New equ...

Based on two sub-samples of SMEs: i) 135 high-tech SMEs; and ii) 330 non high-tech SMEs, using panel data models and the two-step estimation method, this study investigates if the capital structure decisions of high-tech SME and non high-tech SMEs are closer to what is predicted by Pecking Order Theory, or if they are closer to what is predicted by Trade-Off Theory. The results suggest that the...

We study the financing patterns of large and indivisible projects – arguably the main focus of capital structure theory – by developing a filter that identifies investment spikes in a large population of firms. Consistent with the pecking-order theory we find that projects are predominantly financed with debt, particularly in large and profitable firms. However, we reject the hypothesis that in...