A comparative study on the explanatory power of the static tradeoff theory and the pecking order theory on the services companies under the Philippine stock exchange from 2006-2014

The Static Tradeoff and Pecking Order theories are tested on a sample data of 35 services firms under the Philippine Stock Exchange 2006-2014. Empirical results prove that both models can explain some part of the capital structure. The Static Tradeoff theory shows that firm leverage is affected by s...

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Bibliographic Details
Main Authors: Acetre, Gabriel Luis K., Cua, Bernice Bianca I., Rumbaoa, Fitz Gerald G.
Format: text
Language:English
Published: Animo Repository 2016
Subjects:
Online Access:https://animorepository.dlsu.edu.ph/etd_bachelors/8993
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Institution: De La Salle University
Language: English
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Summary:The Static Tradeoff and Pecking Order theories are tested on a sample data of 35 services firms under the Philippine Stock Exchange 2006-2014. Empirical results prove that both models can explain some part of the capital structure. The Static Tradeoff theory shows that firm leverage is affected by several determinants, and the Pecking Order theory displays similar movements between the change of the debt ratio and financial deficit. However, both models have shortcomings.