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The international evidence on the pecking order hypothesis


  • Seifert, Bruce
  • Gonenc, Halit


This study attempts to ascertain how well pecking order behavior applies to firms in the US, the UK, Germany and Japan. Investors in the US and UK have an asymmetric information problem caused, in part, by the relatively widespread ownership of stock in these two countries where managers and insiders know more than outside investors. German and Japanese investors, on the other hand, face an information asymmetric problem arising from relatively less and sometimes distorted information flows and generally less investor rights. Our empirical findings find little overall support for pecking order behavior for American, British, and German firms. On the other hand, the evidence is generally favorable for Japanese firms especially during the 1980s and early 1990s. Our results for Japan are also consistent with the notion that relative transactions costs for debt and equity may be an important influence on financing decisions of firms in Japan.

Suggested Citation

  • Seifert, Bruce & Gonenc, Halit, 2008. "The international evidence on the pecking order hypothesis," Journal of Multinational Financial Management, Elsevier, vol. 18(3), pages 244-260, July.
  • Handle: RePEc:eee:mulfin:v:18:y:2008:i:3:p:244-260

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    Cited by:

    1. Charles HARVIE & Narjoko Dionisius & Sothea OUM, 2013. "Small and Medium Enterprises' Access to Finance: Evidence from Selected Asian Economies," Working Papers DP-2013-23, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    3. Viet Anh Dang, 2011. "Testing Capital Structure Theories Using Error Correction Models: Evidence From The Uk, France And Germany," Post-Print hal-00732527, HAL.
    4. Chen, Dar-Hsin & Chen, Chun-Da & Chen, Jianguo & Huang, Yu-Fang, 2013. "Panel data analyses of the pecking order theory and the market timing theory of capital structure in Taiwan," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 1-13.
    5. Djaoudath Alidou, 2012. "Employees Equity Issue and Asymmetric Information:Evidence from France - Augmentations de capital réservées aux salariés et Asymétrie d’information:Cas de la France," Working Papers CREGO 1120901, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    6. Maria Kokoreva & Anastasia Stepanova, 2013. "Financial architecture and corporate performance: evidence from Russia," HSE Working papers WP BRP 21/FE/2013, National Research University Higher School of Economics.

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