Pecking Order Model of Corporate Financing: Review of Literature

2019 ◽  
Author(s):  
Zaur Abdullazade
Keyword(s):  
Review Of Literature ◽  
Order Model ◽  
Pecking Order ◽  
Corporate Financing

scholarly journals The international evidence of pecking order and trade-off predictions

2010 ◽  
Vol 7 (4) ◽  
pp. 183-196
Author(s):  
Nuttawat Visaltanachoti ◽  
Robin Luo ◽  
Cai Wei
Keyword(s):  
Order Model ◽  
Short Term ◽  
Pecking Order ◽  
Corporate Financing ◽  
Trade Off ◽  
Financing Decisions ◽  
Investment Opportunities ◽  
Term Variation ◽  
Target Leverage

This paper investigates the pecking order and trade-off hypotheses of corporate financing decisions for a sample of 74 countries from 1993 to 2003. Overall, the results confirm predictions shared by the trade-off and pecking order models in that the payout ratio is positively related to profitability and negatively related to investment opportunities, target leverage and volatility. The present study also provides favorable evidence to the pecking order model in that more profitable firms are less levered. Firms with more investments have lower long-term dividend payouts, but dividends do not vary to accommodate short-term variation in investment.

Qualitative Research on Critical Issues In Halal Logistics

2013 ◽  
Vol 1 (2) ◽  
pp. 131 ◽  
Author(s):  
Mohamed Syazwan Ab Talib ◽  
Lim Rubin ◽  
Vincent Khor Zhengyi
Keyword(s):  
Capital Structure ◽  
Agency Theory ◽  
Random Effect ◽  
Random Effect Model ◽  
Order Theory ◽  
Specific Factor ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decision

This is a preliminary study developed to explore the determinants of capital structure of Shariah-compliant firms listed in Bursa Malaysia. This study is primarily motivated by the issue of the determinants still being inconclusive in the area of capital structure. The study is performed using the static models namely Pool Ordinary Least Square, Fixed Effect and Random Effect Model. Empirical analysis on the determinants reveals that country specific factor which is GDP and sector specific factor which is industry concentration are also significant in influencing the corporate financing decisions in this country along with firm specific factors such as efficiency, bankruptcy risk, profitability, tangibility, liquidity and size of the firm. The findings revealed that results are sensitive to models employed in the study. Nevertheless, the applicability of capital structure theories such as the trade-off theory, agency theory and pecking order theory diverge across sectors in Malaysia. The pecking order theory and agency theory are found to be the dominant theories governing the corporate financing decision in the country as well. It indicates strong evidence of hierarchy practised in firms’ financing decision. The finding on agency theory being dominant justifies the function of short-term debt as a controlling mechanism to mitigate the agency problem arises within firms across sectors. 

scholarly journals Testing the pecking order theory of capital structure: the case of Islamic financing modes

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Capital Structure ◽  
Random Effect ◽  
Order Theory ◽  
Equity Financing ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decisions ◽  
Executive Managers ◽  
The Capital Structure

AbstractThe purpose of this paper is to examine whether or not the basic premises according to the pecking order theory provide an explanation for the capital structure mix of firms operating under Islamic principles. Pooled OLS and random effect regressions were performed to test the pecking order theory applying data from a sample of 66 Islamic firms listed on Kingdom of Saudi Arabia stock market over the period 2006–2016. The results show that sale-based instruments (Murabahah, Ijara) track the financial deficit quite closely followed by equity financing and as the last alternative to finance deficit, Islamic firms issue Sukuk. In the crisis period, these firms seem more reliant on equity, then on sale-based instrument and on Sukuk as last option. The study findings also indicate that the cumulative financing deficit does not wipe out the effects of conventional variables, although it is empirically significant. This provides no support for the pecking order theory attempted by Saudi Islamic firms. This research highlights the capital structure choice of firms operating under Islamic principles. It explores the implication of the relevant Islamic principles on corporate financing preferences. It can serve firm executive managers in their financing decisions to add value to the companies.

scholarly journals The dynamics of Pecking Order and Agency theories on crowdfunding concept as alternate finance for start-up businesses

2020 ◽  
Vol 5 (1) ◽  
pp. 1-13
Author(s):  
Francis Kwaku Kuma ◽  
Mohd Effandi Yosuff
Keyword(s):  
Theoretical Aspect ◽  
Review Of Literature ◽  
Pecking Order ◽  
Practical Applications ◽  
Theoretical Perspectives ◽  
Start Up ◽  
Key Concepts ◽  
Definition Of ◽  
The Relationship

The study explores the relevance of theoretical aspect of crowd financing by reviewing the defining literature on Pecking Order and Agency theories in details and evaluates applications of these theories based on crowdfunding. In particular, the study critically considers the key concepts of these theories and how they could be applied in practical terms. The study decides to adopt Pecking Order and the Agency theories because they provide valuable insights into the trend of crowdfunding streams available to firms. The paper primarily adds to existing literature on the broader definition of crowdfunding as a concept and then examine the relationship between this concept and its practical applications to the chosen theories. The study combines these theoretical perspectives with the practical aspects of startup companies raising finance using the crowd because a broad reading of the literature tends to point to in this direction. The key concepts of these theories are critically considered and the study is conducted in the form of review of literature and expression of opinion. Citation: author1, author2, author3. The dynamics of Pecking Order and Agency theories on crowdfunding concept as alternate finance for start-up businesses. 2020; 4(1): 1－13.Received: (February 2, 2020) Accepted: (March 31, 2020)

scholarly journals Profitability and Debt Capital Decision: A Reconsideration of the Pecking Order Model

2013 ◽  
Vol 8 (13) ◽  
Author(s):  
Sankay Oboh Collins ◽  
Adekoya Adeleke Clement ◽  
Adeyeye Ruth Funke
Keyword(s):  
Order Model ◽  
Pecking Order ◽  
Debt Capital

Reconciling Theory and Evidences for Corporate Financing in India

2016 ◽  
Vol 15 (3) ◽  
pp. 295-309 ◽  
Author(s):  
Gaurav Singh Chauhan
Keyword(s):  
Capital Structure ◽  
Stock Price ◽  
Jel Classification ◽  
Pecking Order ◽  
Price Movement ◽  
Corporate Financing ◽  
Theoretical Predictions

The article tries to reconcile theoretical predictions of the two most important capital structure theories with evidences for corporate financing in India. We identify that while the pattern of leverage supports the prediction of pecking order hypotheses strongly, the key arguments of the theory are missing. We also found a significant explanation for incremental changes in debt ratios caused by mechanical stock price movement as compared to the changes caused by the overall issuance activities of firms. Firms do not seem to readjust their debt ratios to counter the drift caused by these stock-related movements in debt ratios. JEL Classification: G32, G20, H25, H62, E62

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