How do CFOs make capital structure decisions? A survey of Greek listed companies

Abstract

Purpose – The aim of this study is to investigate the corporate financing behaviour of nonfinancial Greek listed companies, focusing on how managers determine optimal capital structure. Design/methodology/approach – The study analyses the results derived from questionnaires submitted to the companies' chief financial officers (CFOs), using both descriptive and nonparametric statistics. Findings – The results broadly support the pecking order hypothesis over static trade-off theory. Firms listed on the Athens Stock Exchange prefer to use internal rather than external financing. A deeper examination of the systematic relationship between a number of variables and the financing decision provides tentative support for the existence of asymmetrically distributed information in the market and demonstrates a series of significant correlations among the determinative factors of a new long-term investment. Originality/value – This paper fills the existing gap between prominent theories of corporate leverage and empirical evidence. The questionnaire collects primary research data that are not available from public sources and reports CFOs' opinions and practices in the field.