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Pecking order view (of capital structure) |
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Pecking order view (of capital structure)The argument that external financing transactions costs, especially those associated with the problem of adverse selection, create a dynamic environment in which firms have a preference, or pecking-order of preferred sources of financing, when all else is equal. Internally generated funds are the most preferred, followed by new debt, and debt-equity hybrids. Finally, new equity is at the least preferred source.Pecking order view (of capital structure) Similar MatchesMarket structureMarket structureThe way that suppliers and demanders in an industry interact to determine price and quantity. There are four main idealized market structures that have been used in trade theory: perfect competition, monopoly, oligopoly, and monopolistic competition. Structured debtStructured debtDebt that has been customized for the buyer, often by incorporating unusual options. Structured settlementStructured settlementAn agreement in settlement of a lawsuit involving specific payments made over a period of time. Property and casualty insurance companies often buy life insurance products to pay the costs of such settlements. InfrastructureInfrastructureThe facilities that must be in place in order for a country or area to function as an economy and as a state, including the capital needed for transportation, communication, and provision of water and power, and the institutions needed for security, health, and education. Pie model of capital structurePie model of capital structureA model of the debt-equity ratio of the firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets. Further SuggestionsStructured arbitrage transactionStructured portfolio strategy Structured note Personal tax view (of capital structure) Term structure of interest rates Neighborhood production structure Market microstructure Restructured loan capital structure |
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