TITLE:
High and Low Leverage Choices: Some Evidence from Private Firms
AUTHORS:
Pietro Gottardo, Anna Maria Moisello
KEYWORDS:
Capital Structure, Low Leverage, Internal Capital Markets, Market Share, Liquidity
JOURNAL NAME:
Modern Economy,
Vol.7 No.3,
March
23,
2016
ABSTRACT: This paper studies the determinants of low and high
leveraged financial structures analyzing a sample of 831 medium-large private
firms, in the first and last quartile of the leverage distribution, using panel
data and simultaneous equations procedures in the period 2001-2010. The
empirical findings show that group membership and management factors influence
financing decisions, and that internal capital markets, net working capital
choices and product market position influence private firms’ capital structure
choices, consistently with a pecking order perspective. This study provides
evidence on medium large private firms, which are quite unexplored compared to
small businesses and to the public counterpart, relying on the theoretical
framework of the Pecking Order Theory integrated by product market competition
and internal capital market theories.