文档介绍：本科毕业论文(设计)
外文翻译
原文:
The Determinants of Capital Structure:Evidence from Chinese panies
One early extension was to allow for the incidence of taxation and financial distress. Since the late 1970s, there have been two new strands of research which originate more from the theory of the firm: the ‘pecking order’ theory and the ‘trade-off’ theory. The pecking order theory argues that firms have a preference of issuing financing instruments due to adverse selection problems (Myers and Majluf, 1984). The theory suggests that the financial manager tends to use internal capital as the first choice, then issue debt, and equity will only be considered as the last resort as issuance of equity can be perceived by the market as a signal of a poor future for the investment. In contrast, the trade-off theory emphasizes that an optimal capital structure can be achieved by the trade-off of the various benefits of debt and equity.
. The pecking order theory
The pecking order theory is based on the information asymmetries between the firm’s managers and the outside investors. Ross (1977) was the first to address the function of debt as a signalling mechanism when there are information asymmetries between the firm’s management and its investors. He argued that management has better knowledge of the firm than the investors, and that management will try to avoid debt when the firm is performing poorly for fear that any debt default due to poor cash flow will result in their job loss. The information asymmetry may also explain why existing investors may not favor new equity financing, as new investors may require higher returns pensate for the risks of their investment thus diluting the returns to existing investors. Myers and Majluf (1984) later developed their so-called pecking order theory of financing: .
that capital structure will be driven by firms’ desire to finance new investments preferably through the use of internal funds, then with low-risk debt, and with new equity only as a last re