Do Ultimate Owners Follow the Pecking Order Theory?
10 Pages Posted: 16 Mar 2016 Last revised: 6 Nov 2017
Date Written: February 28, 2017
Previous studies that have tested the pecking order theory have been inconclusive. In this paper, we use unique survey results for private Brazilian firms in order to investigate firms’ choice of capital structure. We document that ultimate owners of privately owned firms follow the pecking order theory, even in presence of subsidized loans. We also show that whether a firm is debt constrained or unconstrained does not affect this finding.
Keywords: Pecking order; SME; capital structure
JEL Classification: G23; G32; L21
Suggested Citation: Suggested Citation