Capital structure of internet companies: Case study

The financing decisions and capital structure of Internet companies are analyzed, and observed findings are related to the common capital structure theories. Large Internet companies usually have low debt, and small Internet companies have high debt. It was found that the trade-off theory of capital structure, pecking order theory, market timing theory, and other theories cannot individually explain a firm's capital structure. However, they can complement each other in describing some patterns of observed behavior. A number of recommendations for capital structure theory and practice are suggested.