Subscribe Now Subscribe Today
Science Alert
 
Blue
   
Curve Top
Journal of Applied Sciences
  Year: 2009 | Volume: 9 | Issue: 24 | Page No.: 4183-4194
DOI: 10.3923/jas.2009.4183.4194
 
Facebook Twitter Digg Reddit Linkedin StumbleUpon E-mail

Correcting for Asymmetry of Information and Debt Capacity on Capital Structure Empirical Tests: Evidence from Europe

Joaquin Lopez Pascual and Jose Maria Carabias Palmeiro

Abstract:
In this study, we examine the performance of the two competing theories of capital structure. We test the theories on sub-samples of firms that are expected to suffer from high asymmetry of information and that are believed to have enough debt capacity. To group the firms we have created two artificial indexes measuring asymmetric information and debt capacity. Present results show that the pecking order theory performs better when tested over the group of companies facing the highest level of asymmetric information. When the asymmetry of information is mixed, the above results are no longer significant.
PDF Fulltext XML References Citation Report Citation
How to cite this article:

Joaquin Lopez Pascual and Jose Maria Carabias Palmeiro, 2009. Correcting for Asymmetry of Information and Debt Capacity on Capital Structure Empirical Tests: Evidence from Europe. Journal of Applied Sciences, 9: 4183-4194.

DOI: 10.3923/jas.2009.4183.4194

URL: https://scialert.net/abstract/?doi=jas.2009.4183.4194

COMMENT ON THIS PAPER
 
 
 

 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 

Curve Bottom