The Application of Pecking Order Theory in Financing

Subject Areas : Financial Knowledge of Securities Analysis

رضوان حجازی ¹ (ندارد)
هاشم ولی پور ² (ندارد)
مهرنوش سیامر ³ (مسئول مکاتبات)

Received: 2011-12-11 Accepted : 2012-03-05 Published : 2012-12-15

Keywords: Capital structure theories, Financing Decisions, Pecking order, Asymmetry information hypothes, Panel data,

Abstract :

In today's competitive environment, financial managers are trying to consider thecapital structure and financial decision in order to increase their companies' value.This research is aimed at studying the ability of pecking order theory in explaining thecapital structure pattern of companies in Iran’s capital market.The statistical population of this research includes all industrial companies listed inTehran Stock Exchange (TSE). 127 industrial companies have been selected induration of 2000-2009 as samples based on a systematical method. Library methodhave used for data collecting, and balanced panel data and panel analysis model haveused for examining the research hypothesis.The obtained results suggest that there is a positive significant relation betweenfinancing deficit and net long-term debt issued as well as between maturing long-termdebt issued and long-term debt issued. This shows that the Iranian companies followpecking order theory in their capital structure pattern.