Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies
The empirical study was focused predominantly on validity tests of the three theories on capital structures, the static trade-off theory, the pecking order theory (information asymmetry theory), and agency cost theory in the Tanzanian context. The study used secondary data from eight of the non-fin...
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| Format: | Article |
| Language: | English |
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EconJournals
2012-08-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://econjournals.com/index.php/ijefi/article/view/286 |
| _version_ | 1797921326021738496 |
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| author | Ntogwa Ng'habi Bundala |
| author_facet | Ntogwa Ng'habi Bundala |
| author_sort | Ntogwa Ng'habi Bundala |
| collection | DOAJ |
| description |
The empirical study was focused predominantly on validity tests of the three theories on capital structures, the static trade-off theory, the pecking order theory (information asymmetry theory), and agency cost theory in the Tanzanian context. The study used secondary data from eight of the non-financial companies listed in Dar Es Salaam Stock Exchange (DSE) from 2006-2012. The study used descriptive (quantitative) approach to test the practicality of the theories in Tanzania. The multiple regressions model used to test the theoretical relationship between the financial leverage and characteristics of the company. The research found that there is no strong evidence for validation of static trade off theory, little support of pecking order theory, but the agency cost theory is confirmed to be valid and practiced in Tanzania. It recommended that Tanzanian companies should be adhering to the determinants of the capital structure in the Tanzanian context found by this study.
Keywords: Capital structure; Tanzania; Pecking Order Theory; Trade–off Theory; Agency Cost Theory
JEL Classifications: G31; G32
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| first_indexed | 2024-04-10T14:14:21Z |
| format | Article |
| id | doaj.art-833150c0e88a4eea8c883970360053e9 |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T14:14:21Z |
| publishDate | 2012-08-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-833150c0e88a4eea8c883970360053e92023-02-15T16:09:37ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382012-08-0124Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed CompaniesNtogwa Ng'habi Bundala0The Tanzania Police Force Mwanza Regional Police The empirical study was focused predominantly on validity tests of the three theories on capital structures, the static trade-off theory, the pecking order theory (information asymmetry theory), and agency cost theory in the Tanzanian context. The study used secondary data from eight of the non-financial companies listed in Dar Es Salaam Stock Exchange (DSE) from 2006-2012. The study used descriptive (quantitative) approach to test the practicality of the theories in Tanzania. The multiple regressions model used to test the theoretical relationship between the financial leverage and characteristics of the company. The research found that there is no strong evidence for validation of static trade off theory, little support of pecking order theory, but the agency cost theory is confirmed to be valid and practiced in Tanzania. It recommended that Tanzanian companies should be adhering to the determinants of the capital structure in the Tanzanian context found by this study. Keywords: Capital structure; Tanzania; Pecking Order Theory; Trade–off Theory; Agency Cost Theory JEL Classifications: G31; G32 https://econjournals.com/index.php/ijefi/article/view/286 |
| spellingShingle | Ntogwa Ng'habi Bundala Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies International Journal of Economics and Financial Issues |
| title | Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies |
| title_full | Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies |
| title_fullStr | Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies |
| title_full_unstemmed | Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies |
| title_short | Do Tanzanian Companies Practice Pecking Order Theory, Agency Cost Theory or Trade-Off Theory? An Empirical Study in Tanzanian Listed Companies |
| title_sort | do tanzanian companies practice pecking order theory agency cost theory or trade off theory an empirical study in tanzanian listed companies |
| url | https://econjournals.com/index.php/ijefi/article/view/286 |
| work_keys_str_mv | AT ntogwanghabibundala dotanzaniancompaniespracticepeckingordertheoryagencycosttheoryortradeofftheoryanempiricalstudyintanzanianlistedcompanies |