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Stakeholder theory understands business in terms of relationships among stakeholders whose interests are mainly joint but may be occasionally conflicting. In the latter case, managers may need to make trade-offs between these interests. The purpose of this paper is to explore the nature of managerial decision-making about these trade-offs.

This paper draws on the ordonomic approach which sees business life to be rife with social dilemmas and locates the role of stakeholders in harnessing or resolving these dilemmas through engagement in rule-finding and rule-setting processes.

The ordonomic approach suggests that stakeholder interests trade-offs ought to be neither ignored nor avoided, but rather embraced and welcomed as an opportunity for bringing to fruition the joint interest of stakeholders in playing a better game of business. Stakeholders are shown to bear responsibility for overcoming the perceived trade-offs through the institutional management of social dilemmas.

For many stakeholder theorists, the nature of managerial decision-making about trade-offs between conflicting stakeholder interests and the nature of trade-offs themselves have been a long-standing point of contention. The paper shows that trade-offs may be useful for the value creation process and explicitly discusses managerial strategies for dealing with them.

This paper focuses on Ṣukūk issuance determinants in Gulf Cooperation Council (GCC) countries. Given the dual characteristic of debt and equity of Ṣukūk as well as their unique benefits of social responsibility, the author questions whether the theories of capital structure, the trade-off and the pecking order are able to well explain the Ṣukūk issuance.

First, the author verifies these theories using capital structure determinants and regresses the Ṣukūk change on these determinants. Second, the author tests the trade-off theory with the target debt model and third, verifies the pecking order theory using the fund flow deficit model.

The empirical results show that capital structure determinants fail to explain both theories. The author confirms that the Ṣukūk change is significatively linked to the deviation from a Ṣukūk target. So, issuing firms balance the marginal costs of Ṣukūk and their benefits of religiosity and social responsibility toward a target debt. The author finds no evidence of the pecking order theory.

This study contributes to corporate finance theory and corporate social responsibility. It verifies if capital structure theories proved in conventional financing can well explain Islamic bonds issuance given their social responsibility benefits.

Managers and investors would pay attention to the social factors explaining Ṣukūk issuance in their finance and investment decisions. They would be enhanced to use this financing tool knowing its social unique benefits. This also should encourage governments to enhance this socially responsible financing. Rating agencies would be motivated to evaluate Ṣukūk and firms would improve the quality and relevance of disclosure to get the best rating.

The author highlights the social factors explaining Ṣukūk issuance and enhances corporate social responsibility (CSR).

The author extends the few literature testing capital structure theories for Islamic bonds and highlights the specific social responsible features of Ṣukūk that would bridge their issuance to capital structure theories. So the author enhances the concept of Islamic CSR. Tying capital structure theories to CSR would also help developing Islamic finance theory as a unique social responsible framework.

The present study aims to identify the determinants of the capital structure of restaurants firms in Portugal, as well as to analyze the application of capital structure theories in those companies.

In order to reach the objectives, a sample of 400 companies belonging to the restaurant sector was used. The analysis was carried out between 2008 and 2017, and multiple linear regression, based on panel data, was applied.

The obtained results allowed to verify that the considered variables have different effects on the capital structure of the companies under study and that the restaurant sector partially applies the trade-off, pecking order and signaling theories.

The purpose of this paper is to investigate the factors affecting capital structure decisions of Istanbul Stock Exchange (ISE) lodging companies.

A model based on the trade‐off and pecking order theories is specified and implications of both theories are empirically tested. The model is estimated using a dynamic panel data approach for five ISE companies for the period of 1994‐2006.

The findings suggest that effective tax rates, tangibility of assets, and return on assets are related negatively to the debt ratio, while free cash flow, non‐debt tax shields, growth opportunities, net commercial credit position, and firm size do not appear to be related to the debt ratio. Although the findings partially support the pecking order theory, neither the trade‐off nor the pecking order theory exactly seem to explain the capital structure of Turkish lodging companies.

The data used in this paper are limited to five companies traded in the ISE, since the data on other companies are not available. A more detailed analysis would use data for other companies in the industry.

The findings of the study clearly demonstrate the importance of capital structure decisions for financial sources.

Although the capital structure theory is extensively examined in the finance literature, there are fewer studies covering the tourism industry, particularly Turkey. The paper establishes the determinants of the capital structure of Turkish lodging companies. The research findings should help managers to make optimal capital structure decisions.

This paper aims to examine the link between financing patterns, information asymmetry and legal traditions in 37 countries during the 1990‐2004 period.

The analysis is based on three theories: the trade‐off theory, pecking order hypothesis and market timing hypothesis. The authors test the predictions of these theories/hypotheses using regression analysis. The econometric method used is panel data with firm and country fixed effects. The authors develop a modified pecking order model which controls for short‐ and long‐term debt level changes and simultaneously test the predictions of all theories.

Consistent with studies for US firms, the results show that firms across all countries adjust toward the target leverage, but with significantly different rate. The long‐term debt contribution in the rate of adjustment is 64 percent in common law countries and 51 percent in civil law countries. The ability of the model to explain changes in leverage ratios is higher in common law countries. The authors find support for market timing hypothesis but no support for pecking order of financing. These results support their conjecture that stronger investor protection, higher transparency and well‐developed financial markets in common law countries reduce the cost of recapitalization.

The limitation of this study comes from lack of data availability to measure contract enforcement, transparency, and corporate governance variables. Future research can incorporate these variables to explain the differences in capital structure decisions across countries with different legal systems.

The findings show that firms' capital structure decisions are not only a function of their own characteristics but also the result of legal and financial market development in which they operate.

This is the first study that sheds light about rate of adjustment to optimal capital structure and pecking order of financing in 37 countries with different legal traditions and financial market developments. The authors are not aware of any other study that uses a modified pecking order model in an international context.

The purpose of this paper is to examine the determinants of capital structure using a dataset of firms in Malaysia.

This paper carries out a panel data analysis of 8,270 observations from 827 listed non-financial firms on the Malaysia stock market over the period 2008–2017. To estimate the model and analyse the data collected from the DataStream and World Bank databases, the authors use static panel estimation techniques as well as two-step difference and system dynamic GMM estimator.

The results show that profitability, growth opportunity, tax-shield, liquidity and cash flow volatility have a negative and significant impact on debt measures. However, the effects of collateral, non-debt tax and earnings volatility on measures of debt are positive and significant. In addition, firm size, firm age, inflation rate and interest rate are important determinants of the present value of debt. The results also show a significant inverse U-shaped relationship between the firm's age and its capital structure. In general, the results support the proposition advocated by the pecking order and trade-off theories.

The results of this study necessitate formulation of various policy measures that can counter the effects of debt on firms.

The present study is among the earliest to use both the book and market value measures of capital structure. It also uses three proxies for each: total debt, long-term debt and short-term debt. It incorporates earning volatility and cash flow volatility as new independent variables in the model. These variables have not previously been used together with both book and market value measures of capital structure. The study also examines the non-monotonic relationship between firm's age and capital structure using a quadratic regression method. It applies both static panel techniques and dynamic GMM estimation techniques to analyse the data.

Purpose – The aim of this chapter is to analyse consequences of the consideration of ethical principles in the financial decisions process of banks. More specifically, we study how the consideration of shariah principles could affect the capital structure of Islamic banks (IBs).

Design/methodology/approach – First, we apply the classical concepts and theories of capital structure (trade-off theory, pecking order theory, agency theory) in the specific context of IBs. Then, through a literature review, we propose some expected determinants of the capital structure of IBs.

Findings – Our theoretical analysis reveals that the trade-off theory is more suitable for IBs. Moreover, in Islamic institutions, information asymmetry and agency conflicts should be less important than in their conventional counterparts. However, our analysis does not allow us to conclude on the optimal combination of equity and non-equity financing.

Research limitations – In this study, we have not constructed a new capital structure theory specific to IBs but we apply the classical concepts and theories (information asymmetry, agency theory, trade-off theory, pecking order theory) to the Islamic context.

Originality/value – The study contributes to both the capital structure and the Islamic finance literature. There are few studies comparing IBs to conventional banks’ capital structure. Our chapter is the first, to our knowledge, which propose to theoretically explain the observed difference between these two categories of banks.

The aim of this empirical study is to explore the factors that affect the capital structure of manufacturing firms and to investigate whether the capital structure models derived from Western settings provide convincing explanations for capital structure decisions of the Pakistani firms.

Different conditional theories of capital structure are reviewed (the trade‐off theory, pecking order theory, agency theory, and theory of free cash flow) in order to formulate testable propositions concerning the determinants of capital structure of the manufacturing firms. The investigation is performed using panel data procedures for a sample of 160 firms listed on the Karachi Stock Exchange during 2003‐2007.

The results suggest that profitability, liquidity, earnings volatility, and tangibility (asset structure) are related negatively to the debt ratio, whereas firm size is positively linked to the debt ratio. Non‐debt tax shields and growth opportunities do not appear to be significantly related to the debt ratio. The findings of this study are consistent with the predictions of the trade‐off theory, pecking order theory, and agency theory which shows that capital structure models derived from Western settings does provide some help in understanding the financing behavior of firms in Pakistan.

This study has laid some groundwork to explore the determinants of capital structure of Pakistani firms upon which a more detailed evaluation could be based. Furthermore, empirical findings should help corporate managers to make optimal capital structure decisions.

To the authors' knowledge, this is the first study that explores the determinants of capital structure of manufacturing firms in Pakistan by employing the most recent data. Moreover, this study somehow goes to confirm that same factors affect the capital structure decisions of firms in developing countries as identified for firms in developed economies.

Discusses alternative strategies which may be employed when differences arise between achieved audit‐sampling results and planned results, which means that risk levels used in ex post decision making may be different from planned levels. Contrasts a conventional strategy — which is to fix the risk of incorrect acceptance at a planned level and to ignore the risk of incorrect rejection or to accept the minimum available level of that risk which is consistent, after the fact, with the planned level of risk of incorrect acceptance — with a theoretically appealing strategy which balances both risk levels in proportion to their perceived disutility. Reports on the results of an experiment involving these two strategies, in which all subjects were auditors with statistical audit experience. Suggests that the most important statistically significant finding is that, in certain circumstances, these auditors are more willing to base audit decisions on statistical evidence after the alternative strategy is explained and available for their use.

The purpose of this paper is to determine the factors that influence in the capital structure of non‐financial companies listed in the Stock Exchange of Lima.

To achieve this goal, the authors used the panel data model with random effects. The study of the capital structure has focussed on the Trade‐off Theory which states that firms finance their investments for tax benefits, while the Pecking Order Theory states that companies have an order of priority on obtaining funding.

The results obtained confirm that profitability, size, collateral value of assets (CVA) and non‐debt tax shields (NDTS) are the factors that determine the level of long‐term debt of these Peruvian companies.

The results obtained confirm that profitability, size, CVA and NDTS are the factors that determine the level of long‐term debt of these Peruvian companies.

This paper is a first contribution on the determinants of the level of indebtedness of the companies in Peru. There is an extensive literature on the determinants of capital structure, but it is the first work done for the business sector in Peru.

El objetivo de este trabajo es determinar los factores que influyen en la estructura de capital de las empresas no financieras peruanas que listan valores en la Bolsa de Valores de Lima.

Para lograr este objetivo se ha utilizado el modelo de datos de panel con efectos aleatorios. El estudio de la estructura de capital de las empresas se ha enfocado en la teoría del trade‐off que manifiesta que las empresas financian sus inversiones para obtener ventajas fiscales, mientras que la teoría del pecking order manifiesta que las empresas tienen un orden de prioridad al momento de obtener financiamiento.

Los resultados obtenidos confirman que la rentabilidad, el tamaño, el valor colateral de los activos y la protección fiscal diferente a la deuda son los factores que determinan el nivel de endeudamiento a largo plazo de las empresas peruanas.

Este trabajo constituye una primera aportación sobre los determinantes del nivel de endeudamiento de las empresas en el Perú. Existe una extensa literatura sobre los factores determinantes de la estructura de capital, pero es el primer trabajo que se realiza para el sector empresarial peruano.