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Determinants of corporate financing decisions: a survey evidence from Czech firms

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Abstract

This paper investigates the empirical evidence on determinants of financing decisions on the pool of respondents among financial managers of Czech firms. The theoretical section provides an overview of prominent contemporary theories on capital structure. Employing Chi-square Sign Test and Logit regression the empirical analysis provides the evidence how the financial managers perceive particular instruments of internal and external financing. We find, that firms follow pecking order theory for working capital financing, however the arguments for pecking order theory in investment financing are not that strong. Firms prefer retained earnings among internal financing instruments and bank loans and leasing among external financing instruments. Finally, the paper discusses the links with practice and some limitations of the results.

Suggested Citation

  • Irena Jindřichovská & Pavel Körner, 2008. "Determinants of corporate financing decisions: a survey evidence from Czech firms," Working Papers IES 2008/01, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2008.
    • Handle: RePEc:fau:wpaper:wp2008_01
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    File URL: http://ies.fsv.cuni.cz/default/file/download/id/7295
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    Cited by:

    1. Irena Jindrichovska & Erginbay Ugurlu & Dana Kubickova, 2013. "Changes in Capital Structure of Czech SMEs: A Dynamic Panel Data Approach," Ekonomika a Management, Prague University of Economics and Business, vol. 2013(3), pages 6-26.
    2. Erginbay UGURLU & Irena JINDRICHOVSKA & Dana KUBICKOVA, 2014. "Working Capital Management in Czech SMEs: An Econometric Approach," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 1(1), pages 311-317, December.

    More about this item

    Keywords

    corporate finance; capital structure; trade-off theory; pecking order theory; transition economies; survey;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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