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

A. Miglo. (2011). Chapter 10 "Trade-Off, Pecking Order, Signaling, and Market Timing Models". in H. Kent Baker, Gerald S. Martin. Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practice. (Wiley and Sons) Mar 31, 2011, pp 171-191

26 Pages Posted: 24 Jun 2010 Last revised: 9 Dec 2016

See all articles by Anton Miglo

Anton Miglo

Birmingham City University

Date Written: March 23, 2010

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.

Keywords: trade-off theory, pecking-order theory, signalling, market timing

JEL Classification: G30, G32

Suggested Citation

Miglo, Anton, The Pecking Order, Trade-Off, Signaling, and Market-Timing Theories of Capital Structure: A Review (March 23, 2010). A. Miglo. (2011). Chapter 10 "Trade-Off, Pecking Order, Signaling, and Market Timing Models". in H. Kent Baker, Gerald S. Martin. Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practice. (Wiley and Sons) Mar 31, 2011, pp 171-191. Available at SSRN: https://ssrn.com/abstract=1629304 or http://dx.doi.org/10.2139/ssrn.1629304

Anton Miglo (Contact Author)

Birmingham City University ( email )

School of Social Sciences
City North Campus
Birmingham, West Midlands B42 2SU
United Kingdom

HOME PAGE: http://https://www.bcu.ac.uk/business-school/about-us/our-staff/anton-miglo

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