Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86053
Authors: 
de Haan, Leo
Hinloopen, Jeroen
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper 02-072/2
Abstract: 
We estimate the incremental financing decision for a sample of some 150Dutch companies for the years 1984 through 1997, thereby distinguishinginternal finance and three types of external finance: bank borrowing, bondissues and share issues. First, we estimate a multinomial logit model whichconfirms several predictions of both the static trade-off theory and thepecking-order theory as to the determinants of financing choices. Next, weuse ordered probit models to determine which financing hierarchy fits thedata best. The results suggest that Dutch firms have a most-preferredfinancing hierarchy: (i) internal finance, (ii) bank loans, (iii) shareissues, (iv) bonds issues.
Subjects: 
corporate finance
discrete choice models
ordered financing hierarchies
JEL: 
G32
C25
Document Type: 
Working Paper

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