Abstract:
The research is about the
corporate financing decisions based on
capital structure theories, especial reference
to static trade-off theory and practice of
listed companies in Sri Lanka. The result
provides mixed support for the notion that
firms does trade-off costs and benefits to
derive an optimal debt ratio. As a result, the
findings that CFOs of listed companies in Sri
Lanka consider different factors in trading
off the costs and benefits of debt financing.
The research finds no significant association
between management and firm
characteristics and static trade-off theories in
corporate financing decisions. The
conclusions drawn from this study were that
the corporate financing decisions in relation
to static trade-off theory differ from
developed countries to developing country in
many ways such as Sri Lanka. However, for
corporate financing decisions in relation to
static trade-off theory to have full impact on
firm value like U.S.A and Europe countries,
CFOs of listed companies in Sri Lanka should
consider static trade-off theory that are in
line with corporate financing decisions.
