Artikel
A revisit of pecking order theory versus trade-off theory: Evidence from Pakistan
The objective of this study is to investigate which of the two competing theoretic frameworks; pecking order theory (POT) or trade-off theory (TOT); better explains the corporate leverage behaviour in Pakistan. For this purpose, we use fixed effects model on a large unbalanced panel data comprising of 13,026 firm-year observations of non-financial firms listed on Karachi Stock Exchange Pakistan during 1972-2010 Our results indicate that leverage has two pervasive and significant relationships. First, leverage is negatively related to current and past profitability. Second, leverage is positively related to past dividends. In addition, empirical results present a reasonable support to POT regarding growth. However, POT gets nominal empirical support in Pakistan regarding firm size. The results of this study will help the corporate managers to better formulate the leverage policy.
- Language
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Englisch
- Bibliographic citation
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Journal: Pakistan Journal of Commerce and Social Sciences (PJCSS) ; ISSN: 2309-8619 ; Volume: 9 ; Year: 2015 ; Issue: 2 ; Pages: 344-356 ; Lahore: Johar Education Society, Pakistan (JESPK)
- Classification
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Wirtschaft
- Subject
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leverage
pecking order theory
trade-off theory
Pakistan
- Event
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Geistige Schöpfung
- (who)
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Qureshi, Muhammad Azeem
Sheikh, Nadeem Ahmed
Khan, Aftab Ahmad
- Event
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Veröffentlichung
- (who)
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Johar Education Society, Pakistan (JESPK)
- (where)
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Lahore
- (when)
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2015
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Qureshi, Muhammad Azeem
- Sheikh, Nadeem Ahmed
- Khan, Aftab Ahmad
- Johar Education Society, Pakistan (JESPK)
Time of origin
- 2015
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