Is there a pecking order? Evidence from a panel of IPO firms

Is there a pecking order? Evidence from a panel of IPO firms We test the pecking order model of capital structure by examining the financing of firms that went public in 1983. We estimate a logit to predict external financing, and a multinomial logit to predict the type of financing using data on the IPO firms' security offerings during 1984–1992. Our results indicate that the probability of obtaining external funds is unrelated to the shortfall in internally generated funds, although firms with cash surpluses avoid external financing. Firms that access the capital markets do not follow the pecking order when choosing the type of security to offer. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Is there a pecking order? Evidence from a panel of IPO firms

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Publisher
Elsevier
Copyright
Copyright © 1996 Elsevier Ltd
ISSN
0304-405x
D.O.I.
10.1016/0304-405X(95)00851-5
Publisher site
See Article on Publisher Site

Abstract

We test the pecking order model of capital structure by examining the financing of firms that went public in 1983. We estimate a logit to predict external financing, and a multinomial logit to predict the type of financing using data on the IPO firms' security offerings during 1984–1992. Our results indicate that the probability of obtaining external funds is unrelated to the shortfall in internally generated funds, although firms with cash surpluses avoid external financing. Firms that access the capital markets do not follow the pecking order when choosing the type of security to offer.

Journal

Journal of Financial EconomicsElsevier

Published: Mar 1, 1996

References

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