Capital Structure and its Determinants During the Pre and Post Period of Recession : Pecking Order vs. Trade Off Theory

Anupam De; Arindam Banerjee

doi:10.17010/ijf/2017/v11i1/108961

Authors

Anupam De Assistant Professor, Department of Management Studies, National Institute of Technology, Durgapur - 713 209, West Bengal
Arindam Banerjee PhD Research Scholar, Department of Management Studies, National Institute of Technology, Durgapur - 713 209, West Bengal

DOI:

https://doi.org/10.17010/ijf/2017/v11i1/108961

Keywords:

Capital Structure

, Financial Leverage, Pecking Order Theory, Trade off Theory, Regression Analysis, Recession

G01

, G03, G32

Paper Submission Date

, February 3 2016, Paper sent back for Revision, July 19, 2016, Paper Acceptance Date, July 31, 2016.

Abstract

This research study was undertaken to understand if there were any significant changes in variables influencing the capital structure decisions of BSE 500 companies in the post period of recession in comparison with the pre - period of recession. A further endeavor was made in this article to investigate if there was a shift in the financing behavior of the firms during the same period of the study. It was observed from the study that the financing behavior of the firms was explained by the pecking order theory in the pre - recession period and trade off theory during the post - recession period.