A Research on Pecking Order Model and Capital Structure of IPO Firms in Taiwan

• Main Authors: Yen, Weu-Chih, 顏偉志
• Other Authors: Yong-Chern Su
• Format: Others
• Language: zh-TW
• Published: 1998
• Online Access: http://ndltd.ncl.edu.tw/handle/93406632601604771121

碩士 === 國立臺灣大學 === 財務金融學系研究所 === 86 === The mainstreams of capital structure researches are static trade off frmaework and the pecking order framework.The former emphizes that firms have their targeted capital structure and move toward the target in the long run.But the pecking order theory suggests that : 1.firms use internal sources of fund first if need to raise fund 2.firms prefer debt to equity if external financing is required. Therefore, there is no targeted capital structure in a firm. The objective of the thesis is to test the explaining ability of the pecking order model in Taiwan and to make relative researches of Taiwanese firms. Because Myers & Majluf(1984) suggested that asymmetric information is a major element of pecking order model, I select the firms that went public in 1992 as my sample.There are total 34 firms and covering 12 industries.It is because that their short track records are likely to make them to face greater asymmetric information problems than other firms. There are 2 steps in the research: First,I use the Logit regerssion analysis to test the above 2 points of pecking order model.Second, I run the nested causality to identify the relationship between financial variables and the capital structure in a firm and to make a comparison with the output of Logit regression analysis. The empirical results indicate that: 1.firms in Taiwan do not follow the pecking order model 2.we can not find strong suppout for the static trade-off model In short, neither the pecking order model nor the static trade- off model can explain the financing decisions in Taiwan completely. It may reflect the unique of financing decisions and the importance of issuing public equity for Taiwanese firms.