Empirical Test of Pecking Order Theory for the US Listed Firms

2020 ◽  
Author(s):  
Zaur Abdullazade
Keyword(s):  
Empirical Test ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Listed Firms ◽  
The Us

scholarly journals The Simultaneity of Corporate Financial Decisions Under Different Levels of Managerial Ownership: A Case of Pakistani Listed Firms

2019 ◽  
Vol 10 (2) ◽  
pp. 147
Author(s):  
Mohamad Helmi bin Hidthiir ◽  
Muhammad Farhan Basheer ◽  
Saira Ghulam Hassan
Keyword(s):  
Agency Theory ◽  
Random Effect ◽  
Order Theory ◽  
Managerial Ownership ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Financial Decisions ◽  
Listed Firms ◽  
Financing Decisions ◽  
The Impact

Purpose- The prime objective of the current study is to investigate the interdepended of financial decision. In addition to that the impact of different level of managerial ownership on the interdepended of financial decisions is also examined agency theory, pecking order theory and the signaling theory are used as the theoretical lenses to draw the theocratical framework.Design/methodology/approach- The balance panel of 161 nonfinancial firm over the period of five years from 2013 to 2017 is used to achieve the research objectives. Polled OLS, Fixed effect and Random effect estimates are employed to answer the reach questions Findings- The managerial ownership with an average mean ownership of 39 is appeared at the top. Interestingly more than 75 percent firms are being controlled by mangers and in more than 60 percent firms of our sample the controlling managers hold more than 40 percent of shares. The Wu Hausman test is performed to determine the existence of the endogeneity problem.  The results indicates that the financial decisions namely cash holding decisions, financing decisions and investment decisions has significant impact on each other. Where the managerial ownership is in nonlinear relationship with financial decisions. The results of the study are also providing support to agency theory, pecking order theory and the signaling theoryResearch implications- The study will be helpful for policymakers, researchers, corporate personals and financial institutions in understanding the interrelationship between financing decisions and the role of managerial ownership in there interdepended.Originality/value- The study is among the pioneering studies on the issue and will provide policy guideline on the said issues.

scholarly journals An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms

2019 ◽  
Vol 12 (3) ◽  
pp. 148 ◽  
Author(s):  
Nguyen ◽  
Ho ◽  
Vo
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Empirical Test ◽  
Empirical Studies ◽  
Order Theory ◽  
Asia Pacific ◽  
Method Of Moment ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
Listed Firms

Raising capital efficiently for the operations is considered a fundamental decision for any firms. Since the 1960s, various theories on capital structure have been developed. Various empirical studies had also been conducted to examine the appropriateness of these theories in different markets. Unfortunately, evidence is mixed. In the context of Vietnam, a rising powerful economy in the Asia Pacific region, this important issue has been largely ignored. This paper is conducted to provide additional evidence on this important issue. In addition, different factors affecting the capital structure decisions from the Vietnamese listed firms are examined. The Generalized Method of Moment approach is employed on the sample of 227 listed firms in Ho Chi Minh City stock exchange over the period from 2008 to 2017. Findings from this study suggest that the Vietnamese listed firms follow the trade-off theory to determine their capital structure (i.e., to determine the optimal debt level). In contrast, no evidence has been found to confirm that the pecking order theory can explain the financing decisions of the Vietnamese listed firms, as previously expected. In addition, findings from this study also indicate that ‘Fund flow deficit’ and ‘Change in sales’ are the most two important factors that affect the amount of debt issued for the Vietnamese listed firms. Implications for academics, practitioners, and the Vietnamese government have also been emerged from the findings of this paper.

scholarly journals KAJIAN EMPIRIS TERHADAP STRUKTUR MODAL PERUSAHAAN DI INDUSTRI MANUFAKTUR.

2020 ◽  
Vol 5 (2) ◽  
pp. 27-36
Author(s):  
Dwi Astutik ◽  
Hesti Ristanto ◽  
Hani Krisnawati
Keyword(s):  
Capital Structure ◽  
Manufacturing Industry ◽  
Empirical Test ◽  
Investment Decision ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Investment Decision Making ◽  
Combination Of Methods ◽  
Managerial Level

Tujuan dari penelitian ini adalah melakukan pengujiann empiris mengenai pengaruh antara profitabilitas dan likuiditas terhadap struktur modal. Objek penelitian dilakukan pada perusahaan-perusahaan yang telah go public dan termasuk dalam industri Manufaktur. Pengambilan data menggunakan penggabungan metode by firm dan by years, dan diperoleh 589 data. Hasil pengujian membuktikan bahwa secara parsial,profitabilitas dan likuiditas berpengaruh negatip dan signifikan terhadap struktur modal. Saran yang dapat direkomendasikan bagi para akademisi dapat dijadikan acuan sebagai pengembangan pengujian terhadap pecking order theory. Bagi para pihak yang ada di jajaran manajerial perusahaan, menjadi rambu-rambu dalam pengambilan keputusan dalam menyusun struktur modalnya. Bagi calon investor dan investor, hasil penelitian ini dapat dijadikan sebagai salah satu bahan pertimbangan dari aspek fundamental dalam pengambilan keputusan investasi.   The purpose of this study is to conduct an empirical test of the effect between profitability and liquidity on capital structure. The object of research is conducted on companies that have gone public and are included in the Manufacturing industry. Retrieval of data using a combination of methods by firm and by years, and obtained 589 data. The test results prove that partially, profitability and liquidity have a negative and significant effect on capital structure. Suggestions that can be recommended for academics can be used as a reference as the development of testing of pecking order theory. For the parties in the managerial level of the company, they become the guidelines in making decisions in preparing their capital structure. For potential investors and investors, the results of this study can be used as a material consideration from the fundamental aspects of investment decision making.

scholarly journals Determinants of Capital Structure in Pakistani Listed Firms (The Case of Pakistani Listed Firms)

2021 ◽  
Vol 6 (3) ◽  
Author(s):  
Khan S ◽  
◽  
Ullah S ◽  
ur Rehman I ◽  
Sami I ◽  
...  
Keyword(s):  
Stock Exchange ◽  
Order Theory ◽  
Insurance Companies ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Leverage Ratio ◽  
Listed Firms ◽  
Financial Firms ◽  
Investment Companies ◽  
Size Growth

The sample data was comprised of non-financial firms listed on Karachi Stock Exchange, Pakistan from 1993 to 2002 excluding banks, insurance companies, and investment companies. We were taken the debt to total assets ratio as a proxy for leverage (dependent variable) that was measured following ways mentioned in previous studies (Jensen (1986), Harris and Revive (1990) and Banerjee, et al., 2000). For potential determinants of leverage, we study four independent variables namely tangibility, size, growth and profitability. Variables affecting leverage ratio were calculated by dividing the total debt by total assets and 3-variables were significantly related to leverage ratio whereas the remaining variables were not statistically significant in having relationship with the debt ratio. Our results showed that tangibility variable confirms tradeoff theory, Growth (GT) variable confirms the agency theory hypothesis and Profitability (PF) confirms the predictions of pecking order theory.

scholarly journals Does Capital Structure Drive Profitability in the Energy Sector?

Energies ◽  
2021 ◽  
Vol 14 (16) ◽  
pp. 4803
Author(s):  
Monika Wieczorek-Kosmala ◽  
Joanna Błach ◽  
Iwona Gorzeń-Mitka
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Energy Sector ◽  
Short Term ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
The Czech Republic ◽  
Listed Firms ◽  
Large Panel

This paper investigates the factors that determine the profitability of non-listed energy firms from four central European countries: Hungary, Poland, Slovakia, and the Czech Republic. We apply the regression analysis, on a large panel of firm-year observations for the 2015–2019 timespan, to verify the hypothesis on the inversed relationship between leverage and profitability of the companies performing in the energy sector. Our results support the inversed relationship for debt in total and long-term debt, which are consistent with the assumptions of the pecking order theory. However, for short-term debt, we have found a direct relationship, which confirms the assumptions of the trade-off theory of capital structure. Our work contributes to the existing debate on the interplay between financial leverage and profitability, by providing evidence for a large panel of non-listed firms, from a single sector (energy)-oriented perspective.

Firm Profitability and Adjustment of Capital Structure: Indian Evidence

2019 ◽  
Vol 23 (3) ◽  
pp. 297-308
Author(s):  
Biswajit Ghose ◽  
Kailash Chandra Kabra
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Adjustment Process ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Partial Adjustment ◽  
Listed Firms ◽  
Indian Context ◽  
Adjustment Speed ◽  
Target Leverage

The present study investigates the relevance of capital structure dynamics in Indian context by examining the speed at which firms adjust towards their target capital structure. Apart from symmetric adjustment speed, the study also investigates the asymmetries in adjustment speed based on profitability of firms. Using partial adjustment framework on an unbalanced panel of 28,532 firm-year observations comprising 2,718 listed firms over a period of 2004–2005 to 2015–2016, the study finds that Indian firms maintain target leverage and adjust towards the same with a moderate annual adjustment speed of around 32 per cent. The study further observes that high-profitability firms, in general, adjust significantly faster than low-profitability firms which possibly indicate better accessibility in the financial market, lesser costs of adjustments and ability to adjust payout ratio for the former than the latter. Further investigation reveals that high-profitability firms make more adjustment in case of over-leverage, whereas low-profitability firms make more adjustment in case of under-leverage. These results possibly indicate the implications of availability of internally generated funds. Overall, the study concludes that adverse selection cost plays important role in the target adjustment process and hence, both trade-off theory and pecking order theory have relevance in Indian context.

The Impact of Financial Crisis on the Determinants of Capital Structure of Listed Firms in India

2017 ◽  
Vol 18 (1) ◽  
pp. 101-121
Author(s):  
Naliniprava Tripathy ◽  
Aman Asija
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Random Effect ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Listed Firms ◽  
The Impact

This study investigates the impact of 2007 financial crisis on the performance of capital structure of 88 non-financial companies listed on National Stock Exchange of India during the period between January 2003 to May 2014 by using Fixed Effect (FE) and Random Effect (RE) Models. The study has divided the data period into two distinct time intervals: (2003 -2007) as “pre-crisis” periods and (2008 – 2014) as “post-crisis” periods. The determinants of capital structure such as size, liquidity, profitability, and tangibility are used in the analysis. The findings show that tangibility and size have a greater influence on capital structure decision before crisis period. The findings also show that the coefficient of profitability is negative, displaying an inverse relationship with leverage. The study concludes that pecking order theory has more explanatory power in comparison to other theories in explaining the factors that determine the capital structure decision of listed firms of India.

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