top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 10 May 2021

Trade-Off Theory and Pecking Order Theory: Evidence from Real Estate Companies in Vietnam

Hoang Duc Le, Nguyen Quang Viet, Nguyen Huaong Anh

National Economics University (Vietnam), Posts and Telecommunications Institute of Technology (Vietnam)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.04.02.347

Pages: 79-94

Keywords: Trade-Off Theory, Pecking Order Theory, Capital Structure

Abstract

This study was implemented with the goal of testing the validity of trade-off theory and pecking order theory in determining the capital structure in 50 listed real estate companies in Vietnam. The result of this study shows that the pecking order theory is the more approriate and should be applied for the listed real estate companies in Vietnam, and be the informative document for those firms to take into account the relevant theory to adjust their own capital structure, so that they can raise their own competitiveness and continue the development of the business

References

  1. Bradley M., Jarrell G.A., Kim E.H., (1984), On the Existence of an Optimal Capital Structure: Theory and Evidence, The Journal of Finance, 39(3), 857-878.

  2. Brealey R.A., Myers S.C., (2003), Principles of Corporate Finance, Seventh Edition, McGraw Hill.

  3. Brigham E.F., Ehrhardt M.C., (2008), Financial Management: Theory and Practice, Twelfth Edition, Thomson Learning.

  4. Coase R., (1960), The Problem of Social Cost, Journal of Law and Economics, 3, 1-44.

  5. Coase R., (1992), The Institutional Structure of Production”, The American Economic Review, 82(4), 713-719.

  6. De Wet J.Hv.H. (2006), Determining the Optimal Capital Structure: A Practical Contemporary Approach”, Meditari Accountancy Research, 14 (2), 1-16.

  7. DeAngelo H., Masulis R., (1980), Optimal Capital Structure under Corporate and Personal Taxation”, Journal of Financial Economics, 8, 3-29.

  8. Abor, J. and Biekpe, N. (2006). An empirical test of the agency problems and capital structure of South Africa quoted SMEs, SA Journal of Accounting Research, 20(1), 51-65.

  9. Abor, J. and Biekpe, N. (2009). How do we explain the capital structure of SMEs in sub-Saharan Africa? Evidence from Ghana, Journal of Economic Studies, 36(1), 83-97.

  10. Allen, M.T. (1995). Capital structure determinants in real estate limited partnerships, The Financial Review, 30, 399-426.

  11. Al-Sakran S.A. (2001). Leverage determinants in the absence of corporate tax system: the case of non-financial publicly traded corporations in Saudi Arabia, Managerial Finance, 27, 58-86.

  12. Amidu M. (2007). Determinants of capital structure of banks in Ghana: an empirical approach, Baltic Journal of Management, 2(1), 67-79.

  13. Ang J.J. and McConnel J. (1982), The administrative cost of corporate bankruptcy: a note, Journal of Finance, 37, 219-216.

  14. Bevan A.A. and Danbolt J. (2002). Capital structure and its determinants in the United Kingdom – A decompositional analysis, Applied Financial Economics, 12(3), 159-170.

  15. Bhaduri S. (2002). Determinants of corporate borrowing: some evidence from the Indian corporate structure, Journal of Economic and Finance, 26, 200-215.

  16. Booth L., Aivazian V., Demirgue-Kunt A. and Maksimovic V. (2001). Capital structure in developing countries, The Journal of Finance, 56(1), 87-130.

  17. Chakraborty, I. (2010). Capital structure in an emerging stock market: The case of India, Research in International Business and Finance, 24, 295-314.

  18. Cressy R, Olofsson C (1997). European SME Financing: An Overview, Special Issue of Small Business Economics, Small Business Economics, 9, 87-96.

  19. Anderson, T.; Hsiao, C. 1981. Estimation of dynamic models with error components, Journal of the American Statistical Association 76, 598–606.

  20. Ang, J. 1976. The intertemporal behavior of corporate debt policy, Journal of Financial and Quantitative Analysis 11, 555–566.

  21. Ang, J. 1991. Small business uniqueness & the theory of financial management, Journal of Small Business Finance 1, 1–13.

  22. Ang, J.; Chua, J.; McConnell, J. 1982. The administrative cost of corporate bankruptcy: a note, The Journal of Finance 37, 219–226.

  23. Arellano, M.; Bond, S. 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations, Review of Economic Studies 58, 277–297.

  24. Baskin, J. 1989. An empirical investigation of the pecking order hypothesis, Financial Management 18, 26–35.

  25. Bhaird, C.; Lucey, B. 2010. Determinants of capital structure in Irish SMEs, Small Business Economics 35, 357–375.

  26. Blundell, M.; Bond, S. 1998. Initial conditions and moment restrictions in dynamic panel data models, Journal of Econometrics 87, 115–143.

  27. Bradley, M.; Jarrell, G.; Kim, E. 1984. On the existence of a capital structure: theory and evidence, The Journal of Finance 39, 857–878.

  28. Berger, A.; Udell, G. 1998. The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle, Journal of Banking and Finance 22, 613–673.

  29. Berggren, B.; Olofsson, C.; Silver, L. 2000. Control aversion and the search for external financing in Swedish SMEs, Small Business Economics 15, 233–242.

  30. Bruno, G. 2005. Approximating the bias of LSDV estimator for dynamic unbalanced panel data models, Economic Letters 87, 361–366.

  31. Cassar, G.; Holmes, S. 2003. Capital structure and financing of SMEs: Australian evidence, Accounting and Finance 43, 123–147.

  32. Chittenden, F.; Hall, G.; Hutchinson, P. 1996. Small firm growth access to capital markets and financial structure: review of issues and an empirical investigation, Small Business Economics 8, 59–67.

  33. De Miguel, A.; Pindado, J. 2001. Determinants of capital structure: new evidence from Spanish panel data, Journal of Corporate Finance 7, 77–99.

  34. DeAngelo, H.; Masulis, R. 1980. Capital structure under corporate and personal taxation, Journal of Financial Economics 8, 3–29.

  35. Degryse, H.; Goeij, P.; Kappert, P. 2010. The impact of firm and industry characteristics on small firms’ capital structure, Small Business Economics 38, 431–447.

  36. Ezeoha, A. 2008. Firm size and corporate financial leverage choice in a developing economy, The Journal of Risk Finance 9, 351–364.

  37. Fama, E.; French, K. 2002. Testing trade-off and pecking order predictions about dividends and debt, The Review of Financial Studies 15, 1–33.

  38. González, V.; González, F. 2012. Firm size and capital structure: evidence using dynamic panel data, Applied Economics 44, 4745–4754.

  39. Gujarati, D.; Porter, D. 2010. Essentials of econometrics. 4th ed. New York: McGraw – Hill International.

  40. Hall, G.; Hutchinson, P.; Michaelas, N. 2000. Industry effects on the determinants of unquoted SMEs capital structure, International Journal of Economics of Business 7, 297–312.

  41. Baskin, J. (1989). An empirical investigation of the pecking order hypothesis.Financial management, 26-35.

  42. Bevan A.A. and Danbolt J. (2002). Capital structure and its determinants in the United Kingdom – A de-compositional analysis, Applied Financial Economics, 12(3), 159-170.

  43. Butters, J. K. (1949). Federal Income Taxation and External vs. Internal Financing. The Journal of finance, 4(3), 197-205.

  44. Chen, J. J. (2004). Determinants of capital structure of Chinese-listed companies. Journal of Business research, 57(12), 1341-1351.

  45. Damodaran, A. (2001). Corporate finance: theory and practice.

  46. Dang Thi Quynh Anh and Quach Thi Hai Yen (2014). Factors influencing the capital structure of listed companies on Ho Chi Minh Stock Exchange (HOSE). Development and Integration Magazine, Issue 18 (29) – September-October 2014.

  47. De Jong, A., Kabir, R., & Nguyen, T. T. (2008). Capital structure around the world: The roles of firm-specific determinants. Journal of Banking & Finance, 32(9), 1954-1969.

  48. Donaldson, G. (1961). Corporate debt capacity.

  49. Eriotis N. (2007). How firm characteristics affect capital structure: an empirical study, Managerial Finance, 33(5), 321-331.

  50. Frank, M. Z., & Goyal, V. K. (2007). Corporate leverage: How much do managers really matter?. Available at SSRN 971082.

  51. Gruber, M. J., & Warner, J. B. (1977). Bankruptcy costs: some evidence. The journal of Finance, 32(2), 337-347.

  52. Kester, W. C. (1986). Capital and ownership structure: A comparison of United States and Japanese manufacturing corporations. Financial management, 5-16.

  53. Kraus, A., & Litzenberger, R. H. (1973). A state‐preference model of optimal financial leverage. The Journal of Finance, 28(4), 911-922.

  54. Le Dat Chi(2013). Factors affecting the capital structure decision of finance managers in Vietnam.Development & Integration Magazine, No. 9 (19) – March- April 2013.

  55. Michaelas N., Chittenden F. and Poutziousris P. (1999). Financial policy and capital structure choice in UK SMEs: empirical evidence from company panel data, Small Business Economics, 12, 113-130.

  56. Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American economic review, 261-297.

  57. Myers, S. C. (1977). Determinants of corporate borrowing. Journal of financial economics, 5(2), 147-175.

  58. Myers, S. C. (1984). The capital structure puzzle. The journal of finance, 39(3), 574-592.

  59. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of financial economics, 13(2), 187-221.

  60. Oolderink, P. (2013). Determinants of capital structure: static trade-off theory vs. pecking-order theory: evidence from Dutch listed firms.

  61. Shyam-Sunder, L., & C Myers, S. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of financial economics, 51(2), 219-244.

bottom of page