• Journal of the Korea Academia-Industrial cooperation Society
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• v.12 no.12
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• pp.5663-5670
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• 2011

This study performed empirical analyses of the static trade-off theory and the pecking order theory which explain financing behavior of firms. The results of regression analyses using the data of 762 listed non-financing firms on the KOSDAQ market from 2000 to 2010 have shown mixed evidences supporting either the trade-off theory or the pecking order theory. Specifically, as the effective tax rate and the firm size increases, debt ratio increases, which is consistent with the trade-off theory. However as the growth opportunity and the profitability increases, debt ratio decreases, which is consistent with the pecking order theory.

• Journal of Navigation and Port Research
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• v.43 no.4
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• pp.264-272
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• 2019

In this study, the rate of return on investment used as a proxy variable for the entity's value and financial structure (liability ratio) is related to positive balance. This is consistent with the Static Tradeoff Theory (STT) that the entity's value and financial structure are related to a positive balance because the capital expense of a debt (tax-saving effects) that is less than its equity cost before it is in financial difficulty. Also, operating profitability (EBITDA/Sales), investment safety, total asset growth, net working capital and depreciation expenses are related to negative (-) with financial structure (liability ratio). This is the result of an analysis consistent with the Pecking Order Theory (POT). Fuel costs, borrowing, total asset turnover, financial costs, and tangible asset ratios have a significant positive relationship with the debt ratio. This is consistent with the agency theory and confirms that excessive chartering expenses, such as the bankrupt H company, are the main factors that pressure the financial structure of Korean ocean carriers.

• The Korean Journal of Financial Management
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• v.24 no.1
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• pp.109-147
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• 2007

According to the perspective of capital structure theory, we analyzed the dynamism of the capital structure determinants by using panel data of 244 KOSDAQ firms based on two-step GMM system methodology suggested by Blundell Bond(1998). This dynamic methodology had not been used to analyse capital structure determinants in Korea. In the dynamic model of capital structure, profit had negative effect on the book leverage and market leverage, which meant supporting pecking order theory. Growth opportunity (MBR) affected negatively to the market leverage. For the determinants of leverage, earnings volatility had significantly positive effect on KOSDAQ 50 firms. KOSDAQ and KOSDAQ 50 firms had the target leverage. The adjustment speed in KOSDAQ firms was 0.4958 on the book leverage, it was faster than in KOSDAQ 50 firm's 0.2863 on the book leverage and the adjustment speeds for the market leverage were 0.7651 for KOSDAQ firms and 0.5643 for KOSDAQ 50 firms. There was difference in adjustment cost between KOSDAQ firms and KOSDAQ 50 firms.

• Management & Information Systems Review
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• v.31 no.1
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• pp.89-116
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• 2012

This paper is an empirical study for the listed manufacturing companies in the Korea Stock Exchange during the sample period(2001-2010). The research is based on the target adjustment model(Shyam-Sunder and Myers(1999)) and the pecking order model(Frank and Goyal(2003)), and is aimed at reflecting the critical viewpoint of Chirinko and Singha(2000). An analysis in the model of Shyam-Sunder and Myers(1999) shows the value is too low to support the pecking order model in view of the following results. A target adjustment coefficient value is between 0 and 1, and is significant variable and explanatory power is very high, while deficit-in-funds coefficients close to 0. In addition, the result of an empirical test following the methodology used by Frank and Goyal(2003) does not support the pecking order theory.

• The Journal of the Korea Contents Association
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• v.21 no.10
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• pp.368-377
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• 2021

This study analyzed the determinants of capital structure based on the financial statements of agricultural corporations disclosed on the DART(data analysis, retrieval and transfer system) of the Financial Supervisory Service since 2011, when the Korea international financial reporting standards (K-IFRS) was introduced. There have been many empirical studies on the capital structure so far, but there are no studies targeting agricultural corporations. The sample period of agricultural corporations was from 2015 to 2019, with the debt ratio as the dependent variable, and among the variables suggested as meaningful in existing empirical studies, ROA(profitability), SIZE(corporate size), LIQ(liquidity), TA(tangible asset ratio), FA(fixed long-term suitability ratio), and GROWTH(growth potential) were selected as independent variables and panel data analysis was performed. As a result of the analysis, it was found that the debt ratio decreased as the ROA and SIZE of agricultural corporations increased. This can be interpreted as supporting the pecking order theory rather than the static trade-off theory in the relationship between the ROA and SIZE of Korean agricultural corporations with the capital structure. In addition, it was found that the debt ratio increased as the FA increased. These results suggest that Korean agricultural corporations need to establish a financing policy in consideration of ROA, SIZE, and FA.

• The Korean Journal of Financial Management
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• v.23 no.2
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• pp.109-141
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• 2006

The central factor in the pecking order theory of financial structure is the asymmetric distribution of information between managers and less-informed outside investors. Myers and Majluf (1984) show that this asymmetry leads managers to prefer internal funds to external funds. Funds are raised through equity issues only after the capacity to issue debt has been exhausted. In contrast, according to static tradeoff theory, an optimum financial structure exists by the tradeoff between tax saving by debt and bankruptcy costs. This study examines the recent changes of Korean firms' financial structure and financing behavior and the determinants of financial structure. The sample of firms comes from the period of $1996{\sim}2004$, and the number of firms is 32,003. The major findings are as follows. First, in contrast with previous studies using US firms as sample, Korean firms have been using debt financing as their major financing instrument. Especially, the firms in the fund deficit situation relies much more on $long{\sim}term$ and $short{\sim}term$ debts rather than on equity issues. Second, as is the case with previous studies using US firms sample indicates, the financing deficit variable can not explain perfectly the net debt issue. However, compared with net equity issue variable, net debt issue variable is more closely related to the financing deficit variable. Third, when financing deficit variable is added to the current list of explanatory variables of financial structure determinants model, it has a significant and positive explanatory power. In addition, the coefficients of determinants are much improved. Thus, it is concluded that although pecking order theory is not perfect, it appears to be more useful compared to static tradeoff theory, at least in explaining the recent financing behavior of Korean manufacturing firms.