Financing structure of chilean firms pecking order model application

Abstract

This article makes an analysis of the different variables that affect the financing structure of 40 Chilean companies listed on the Santiago Stock Exchange, between 2010 and 2013 Dynamic models use panel data for the analysis of financial variables and their relation to the generation of cash flows of the company. The results show the pecking order model does not apply, as companies that have higher free cash flows prefer to finance their projects with debt or equity is not met, reflecting that they prefer to borrow to take advantage of the tax benefit.