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Financing Preferences of Spanish Firms: Evidence on the Pecking Order Theory

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  • Javier Sánchez-Vidal
  • Juan Martín-Ugedo

Abstract

This paper analyses some of the empirical implications of the pecking order theory in the Spanish market using a panel data analysis of 1,566 firms over 1994–2000. The results show that the pecking order theory holds for most subsamples analyzed, particularly for the small and medium-sized enterprises and for the high-growth and highly leveraged companies. It is also shown that both the more and the less leveraged firms tend to converge towards more balanced capital structures. Finally, we observe that firms finance their funds flow deficits with long term debt. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Javier Sánchez-Vidal & Juan Martín-Ugedo, 2005. "Financing Preferences of Spanish Firms: Evidence on the Pecking Order Theory," Review of Quantitative Finance and Accounting, Springer, vol. 25(4), pages 341-355, December.
    • Handle: RePEc:kap:rqfnac:v:25:y:2005:i:4:p:341-355
    DOI: 10.1007/s11156-005-5459-6
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    2. Allini, Alessandra & Rakha, Soliman & McMillan, David G. & Caldarelli, Adele, 2018. "Pecking order and market timing theory in emerging markets: The case of Egyptian firms," Research in International Business and Finance, Elsevier, vol. 44(C), pages 297-308.

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    Keywords

    capital structure; pecking order theory;

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