In this paper we investigate the validity of the Pecking Order Theory on all Italian publicly traded firms from 1987 to 2012. According to this theory, firms have to rely first on internal cash flows to finance new investments. Whenever external financing is necessary, firms need to issue first debt whereas equity is the least preferred option, due to the asymmetric information problems it generates. Our results indicate that Italian firms, in contrast to the pecking order theory, often rely on equity to finance their deficit. In particular, this is true for firms at the beginning of 2000s’ and for small firms.