Munich Personal RePEc Archive

The Pecking Order, Trade-off, Signaling, and Market-Timing Theories of Capital Structure: a Review

Miglo, Anton (2010): The Pecking Order, Trade-off, Signaling, and Market-Timing Theories of Capital Structure: a Review.

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Abstract

This paper surveys 4 major capital structure theories: trade-off, pecking order, signaling and market timing. For each theory, a basic model and its major implications are presented. These implications are compared to the available evidence. This is followed by an overview of pros and cons for each theory. A discussion of major recent papers and suggestions for future research are provided.

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