Do ultimate owners follow the pecking order theory?

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type 01 Jan 2017 English Publisher:Elsevier BVJournal:The Quarterly Review of Economics and Finance, volume 67, pages 45-50 (issn: 1062-9769,

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Authors: Rodrigo Zeidan; Koresh Galil; Offer Moshe Shapir;

doi: 10.1016/j.qref.2017.04.008 , 10.2139/ssrn.2747749

Do ultimate owners follow the pecking order theory?

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Abstract

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.

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