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Determinants of Capital Structure of Swedish limited companies: Testing Trade-off Theory Against Pecking Order Theory
Dalarna University, School of Technology and Business Studies, Business Administration and Management.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Research question- This thesis investigates the determinants of capital structure of the Swedish companies. In order to do so, the two dominant theories of the corporate structure are studied and their assumptions are tested. Thus, the study researches which one of the two theories is more appealing for the Swedish market.

Methodology-The study follows a purely quantitative study, by conducting an econometric analysis. The data are collected from a secondary source and more particularly the "Retriever" database, which contains financial data of the Swedish companies.

Findings- The findings indicate that the determinants of the corporate structure for the Swedish market do not differ from other studies which have been conducted in other countries. However, there is a difference when it comes to tax and non-tax shields. The results suggest that in most cases the Pecking Order Theory appears to be more representative for the Swedish market, since most of the coefficient appear to be in favour of it. Moreover, the significance of the effect of the industry for the financial leverage is confirmed.

Place, publisher, year, edition, pages
Keyword [en]
Corporate structure, determinants, Modigliani-Miller, Capital Irrelevance, Trade-off theory, Pecking order theory, Agency theory, Swedish limited companies, Financial leverage.
National Category
Business Administration
URN: urn:nbn:se:du-21886OAI: diva2:941371
Available from: 2016-06-22 Created: 2016-06-22

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