Abstract:
The research is about the corporate financing decisions based on capital structure theories,
especial reference to agency cost theory and practice of listed companies in Sri Lanka. The
result finds no evidence of perceived importance of agency cost theory of listed companies in
Sri Lanka. As a result, the findings those CFOs of listed companies in Sri Lanka consider
different factors on debt and equity issuance decisions. The research finds no significant
association between management and firm characteristics and agency cost theory in corporate
financing decisions. The conclusions drawn from this study were that the corporate financing
decisions in relation to agency cost theory differ from developed countries to developing
country in many ways such as Sri Lanka. However, for corporate financing decisions in relation
to agency cost theory to have full impact on firm value like U.S.A and Europe countries,
CFOs of listed companies in Sri Lanka should consider agency cost theory that are in line
with corporate financing decisions.
