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Capital Structure of Portuguese Service Industries: A Panel Data Analysis

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  • Paulo J. Maçãs Nunes
  • Zélia M. Serrasqueiro

Abstract

Using panel data for the period 1999--2003, this study shows that internal and external financing are not perfect substitutes, not corroborating the theorem of Modigliani and Miller. Portuguese service industries prefer internal to external financing, corroborating Pecking Order theory. The bigger the size of the company, the greater the level of debt, corroborating Trade-Off and Signalling theories. The negative relationship between the amount of fixed capital and debt corroborates Agency theory. The results allow us to conclude that debt contributes to improving management efficiency, agency problems between shareholders and creditors having little relevance.

Suggested Citation

  • Paulo J. Maçãs Nunes & Zélia M. Serrasqueiro, 2007. "Capital Structure of Portuguese Service Industries: A Panel Data Analysis," The Service Industries Journal, Taylor & Francis Journals, vol. 27(5), pages 549-562, July.
    • Handle: RePEc:taf:servic:v:27:y:2007:i:5:p:549-562
    DOI: 10.1080/02642060701411690
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    Cited by:

    1. Cristiana Donati, 2017. "Service industries, growth dynamics and financial constraints," The Service Industries Journal, Taylor & Francis Journals, vol. 37(3-4), pages 190-205, March.
    2. Pacheco, Luís, 2016. "Capital structure and internationalization: The case of Portuguese industrial SMEs," Research in International Business and Finance, Elsevier, vol. 38(C), pages 531-545.
    3. Voutsinas, Konstantinos & Werner, Richard A., 2011. "Credit supply and corporate capital structure: Evidence from Japan," International Review of Financial Analysis, Elsevier, vol. 20(5), pages 320-334.

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