Study of The pecking order theory in financing behavior's firms in Iran under financing deficit and surplus situations

Subject Areas : Journal of Investment Knowledge

hojjat-allah ansari ¹ , ronak ghanbarpour ² , zeinab aidi ³

1 - Associate Professor, management department school of social sciences and economics. .alzahra university. Tehran. Iran
2 - Management department, school of social sciences and economics, Alzahra University, Tehran city, Iran.
3 - Management department, school of social sciences and economics, Alzahra University, Tehran city, Iran

Received: 2021-04-13 Accepted : 2021-04-18 Published : 2021-09-23

Keywords: Financing deficit and surplus, The pecking order theory, financing decision, The pecking order puzzle, Capital Structure,

Abstract :

Capital structure is a combination of debt and equity that companies use to finance their long-term assets. Each of the theories proposed in the field of capital structure is influenced by a specific factor or factors, but so far no single theory has been developed that can comprehensively explain the structure of capital. This study tries to examine the ability of the theory of preferential behavior to explain the financing decisions of 119 companies listed on the Tehran Stock Exchange, in the period of 1388 to 1398. Therefore, by examining the financing behavior of companies under financing deficit and surplus situations, the correctness of the theory of preferential behavior has been examined. Data analysis was performed using the generalized least squares method. The results show that the financing hierarchy of companies in a deficit situation does not follow the theory of preferential behavior, and in this case, companies finance first through the issuance of shares and then through debt. The results also show that the theory of preferential behavior is valid for companies in a surplus situation.

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