Do Companies From Emerging Markets Follow Classic Theories of Capital Structure Choice? Empirical Study on Companies From Central and Eastern Europe

Abstract

Capital structure choice is among the key corporate decisions which influence its long term performance and it is considered to be one of the core problems in th theory of corporate finance. Despite the existence of plenty of empirical research papers in the area, many conceptual problems have not been resolved even for developed economies. The existing research on emerging markets covers only few countries within this group and does not provide empirical results for all classical capital structure concepts. The main research question of this paper is to explore whether the firms from Eastern and Central Europe follow the pecking order of financing . Does the pecking order concept underlie the motives for long term financing policies in industrial firms in emerging capital markets of Eastern and Central Europe?