39 Pages Posted: 13 Aug 2003
Date Written: April 2004
Financing decisions seem to violate the central predictions of the pecking order model about how often and under what circumstances firms issue equity. Specifically, most firms issue or retire equity each year, the issues are on average large, and they are not typically done by firms under duress. We estimate that during 1973-2002 the year-by-year equity decisions of more than half of our sample firms violate the pecking order. And contradictions are more common among larger firms.
Suggested Citation: Suggested Citation
Fama, Eugene F. and French, Kenneth R., Financing Decisions: Who Issues Stock? (April 2004). CRSP Working Paper No. 549. Available at SSRN: https://ssrn.com/abstract=429640 or http://dx.doi.org/10.2139/ssrn.429640
By Eugene Fama