Hellenic Open University Conferences, International Conference on Business & Economics of the Hellenic Open University 2015

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Reviewing the capital structure theories before and after the crisis: United Kingdom evidence using Panel Data approach
George Alexopoulos, Panagiota Papaconstantinou

Building: Titania
Room: Platon
Date: 2015-02-07 09:00 AM – 10:45 AM
Last modified: 2015-01-27

Abstract


In this paper we examine the prevailing theories of capital structure (Trade off theory, theory of representation costs, Pecking order theory and Market timing), in all quoted companies on London Stock Exchange, before and after the crisis, for the foreign capitals use in order to establish which theory best explains the capital structure of companies of England.  For the first time we examined  a large sample of companies in years of 2000-2012. This paper’s differentiation lies in that it turned out that in all the English listed companies  the investment has no impact on their borrowing levels, thus lending mainly serves their current liabilities and also positively assists the growth of the companies, and observes how the significance of the variable Markets to Book  Ratio affect our basic theories after crisis. Our findings are more consistent with the Trade off theory.


Keywords


Capital structure, Pecking order theory, Trade off theory