Traditional or behavioural? A combined decision making trial and evaluation laboratory and analytic network process approach for capital structure determinants of Turkish companies

Abstract

AbstractThe aim of this study, following a new approach under the irrationality of managers, is to investigate the most effective determinants of capital structure decisions by combining traditional capital structure determinants with managerial‐behavioural biases. In line with this objective, considering the capital structure decision as one that employs multicriteria decision making, two of the multicriteria decision‐making methods—namely, Decision Making Trial and Evaluation Laboratory (DEMATEL) and Analytic Network Process (ANP)—are integrated into a hybrid method to analyse the interdependent relationships among traditional capital structure determinants and managerial‐behavioural biases and to prioritize them by making dual comparisons. Our findings show that managerial‐behavioural biases, not traditional capital structure determinants, are more effective in the capital structure decision and that anchoring is the most influential among managerial‐behavioural biases.