Pecking at Pecking Order Theory: Evidence from Pakistan’s Non-financial Sector
Sheikh Jibran, Shakeel Ahmed Wajid, Iqbal Waheed, Tahir Masood
Muhammad
Klíčová slova
pecking order theory, capital structure, debt issuance, equity, non-financial firms, bankruptcy, trade-off
Abstrakt:
This study tests the Pecking Order Theory for the capital structure of listed firms in Pakistan.
As per Pecking Order Theory in capital structure formulation, internally generated resources
would have first priority, followed by debt issuance where equity is used as a last resort. In its
strong form, the Pecking Order Theory sustains that equity issues would never occur, whereas
in its weak form, limited amounts of issues are acceptable. The methodology adopted in this
empirical study involves cross-section regressions and the testing of hypotheses stemming from
the underlying theory in its strong and weak forms.
A sample of capital structure of non-financial firms listed at KSE is considered from 2001 to
2008. A statistical tool of panel data regression analysis is used to test different firms’ data. The
value of R2, t-test and F-Stat indicate firms in KSE supporting the weak form of pecking order
theory, i.e., the option of using internal equity and debt is more preferred and a limited amount
of external equity is used for reinvestment and fund raising purposes.
Celý článek ke stažení:
Pecking at Pecking Order Theory: Evidence from Pakistan’s Non-financial Sector [PDF soubor] [Velikost souboru: 537.42 KB]
10.7441/joc.2012.04.06
Sheikh J., Shakeel A. W., Iqbal W., Tahir M.
M. (2012). Pecking at Pecking Order Theory: Evidence from Pakistan’s Non-financial Sector. Journal of Competitiveness, 4 (4), 86-95 https://doi.org/10.7441/joc.2012.04.06
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