"Pecking Order or Trade-Off Hypothesis" Evidence on The Capital Structure (A Study on Mining Companies in Indonesia)  

Oleh:

Daito, Apollo

Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI - atma jaya
Dalam koleksi: BALANCE: Jurnal Akuntansi, Auditing dan Keuangan vol. 1 no. 2 (Sep. 2004), page 71-82.
Topik: hypothesis; capital strucutre; pecking order hypothesis; trade - off hypothesis
Fulltext: hal 71.pdf (158.7KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ135.1 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

In this paper we test the pecking order and trade - off hypotheses of corporate financing decisions using a cross - section of the largest Mining Companies In Indonesia. We build on Allen (1993) and Baskin (1989) to set up three models in which trade - off and pecking order theories give distinctively different predictions : (1) the determinants of leverage, (2) the relationship between leverage and dividends, and (3) the determinants of corporate investment. In model (1), we find a significant negative correlation between leverage and profitability; in model (2) we find a significant positive correlation between current leverage and past dividends. These results broadly support the pecking order hypothesis over trade - off theory. However, model (3) is inconclusive. Overall, the results provide tentative support for the pecking order hypothesis and demonstrate that a conventional model of corporate capital structure can explain the financing behaviour of mining companies in Indonesia.

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