Behavioral Capital Structure: Is the Neoclassical Paradigm Threatened? Evidence from the Field

Journal of Behavioral Finance, Vol. 10, No. 1, pp.19-32

33 Pages Posted: 12 Feb 2009 Last revised: 27 Sep 2010

See all articles by Dimitrios Vasiliou

Dimitrios Vasiliou

National and Kapodistrian University of Athens

Nikolaos Daskalakis

Panteion University

Date Written: 2009

Abstract

We show that capital structure decisions and financial behavior in general seems to deviate from the traditional neoclassical paradigm. Behavioral finance and the post Keynesian financial behavior approach provide better explanations in "decoding" financial managers' opinions and behavior. Specifically, our starting point is the analysis of qualitative corporate data from the Greek market. The data come from the answers in a detailed questionnaire and in this paper we analyze capital structure determination and the relationship between capital structure and stock price. Results are in favor of the market timing approach and the managers' opinions and behaviour on issues concerning capital structure determinants and the relationship between capital structure and stock price seem to be better explained under the behavioral finance proponents and within the post Keynesian paradigm.

Keywords: Capital Structure, Behavioral Finance, Post Keynesian Approach, Qualitative Corporate Analysis

JEL Classification: G3, G32

Suggested Citation

Vasiliou, Dimitrios and Daskalakis, Nikolaos, Behavioral Capital Structure: Is the Neoclassical Paradigm Threatened? Evidence from the Field (2009). Journal of Behavioral Finance, Vol. 10, No. 1, pp.19-32, Available at SSRN: https://ssrn.com/abstract=1341854

Dimitrios Vasiliou

National and Kapodistrian University of Athens ( email )

Athenes
Greece
0030 210 3689486 (Phone)

Nikolaos Daskalakis (Contact Author)

Panteion University ( email )

136 Sygrou
Athens
Greece
GR17671 (Fax)

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