New Publication: Prof. Richard Werner & Dr. Konstantinos Voutsinas in Structural Change and Economic Dynamics

We’re delighted to share that Prof. Richard A. Werner (ARBE Convenor) and Dr. Konstantinos Voutsinas have a new article published in Structural Change and Economic Dynamics:

Title: Trade-off theory vs. the pecking order hypothesis: Japanese evidence on capital structure under financial constraints
Journal: Structural Change and Economic Dynamics, Vol. 74 (September 2025), pp. 944–962
DOI: 10.1016/j.strueco.2025.06.004
Link (ScienceDirect): https://www.sciencedirect.com/science/article/pii/S0954349X25001031 ScienceDirect

What the paper explores

  • A head-to-head “horse race” between the trade-off theory and the pecking order hypothesis, using the largest Japanese dataset of its kind: 1,528 public and 2,143 private firms over 1980–2007 (60,037 observations).
  • Monetary conditions & financial constraints as explicit determinants of which theory best explains corporate financing choices—an extension beyond standard capital-structure tests.

Key findings at a glance

  • Regime sensitivity: The pecking order fits best in the high-growth 1980s, while the trade-off theory dominates during the low-growth 1990s and subsequent credit crunch.
  • Firm heterogeneity: Trade-off explains firms with low leverage, whereas pecking order performs best for private and high-leverage firms.

Why it matters

Capital-structure debates often abstract from the macro-monetary environment. This study shows that growth regimes, credit supply, and financial constraints can tilt the evidence toward one theory or the other—clarifying long-standing empirical contradictions and offering a roadmap for context-aware corporate finance.

How to access

  • Publisher page: Structural Change and Economic Dynamics (ScienceDirect).
  • Repository record with metadata/DOI: Corvinus University archive entry.

If you work on corporate finance, banking, or monetary transmission, we think you’ll find this a valuable reference. Follow ARBE for more publication news and research insights.