Trade-off theory for the definition of the financing structure of PYME's in Bucaramanga

Abstract

This article presents a diagnostic of frm's debt of small-and-medium-size companies in Bucaramanga, based on the optimal amount of debt that they should have according to a model adjusted for our environment, using trade-off theory concepts. This model that includes tax advantages of debt and costs of maintain it, affected by their associated probabilities, yields the optimal amount of debt. The comparison with current amount of debt for small and medium sized frms by using statistical treatment showed that these kinds of organizations don't keep the right amount and most of them actually have less debt than the optimum suggested by the model.