TESTING THE PECKING ORDER THEORY FORECASTS IN BRAZILIAN COMPANIES FINANCING: A NEW METHODOLOGY

Authors

  • Robert Aldo Iquiapaza Universidade Federal de Minas Gerais
  • Hudson Fernandes Amaral Universidade Federal de Minas Gerais
  • Marina da Silva Borges de Araújo Universidade Federal de Minas Gerais

Abstract

Considering the existence of asymmetric information between managers and investors, Myers (1984) affirms that the configuration of corporate capital structure is based on a hierarchy known as Pecking Order Theory (POT), favoring sequentially the use of internal resources, debt emission and, at last, stocks issues. The POT's empiric verification breaks up into methodological matters; some times being confirmed and other does not. In this article a different methodology is proposed recognizing the characteristics of companies such as size, profitability and growth, to explain the financing of the deficit. The results indicate that only the smaller size companies in the sample, negative profitability, and lower growth present a weak adherence to the POT's forecasts. For this reason this cannot be considered a general theory to explain the corporate capital structure.

KEYWORDS: Pecking Order; Capital structure; Profitability; Enterprise size; Growth of the assets.

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Author Biographies

Robert Aldo Iquiapaza, Universidade Federal de Minas Gerais

Doutorando em Administração pela Universidade Federal de Minas Gerais (UFMG). Pesquisador, Bolsista do CNPq, no Centro de Pós-graduação e Pesquisa em Administração da Universidade Federal de Minas Gerais (CEPEAD/UFMG).

Hudson Fernandes Amaral, Universidade Federal de Minas Gerais

Doutor em Sciences de Gestion pela Université Pierre Mendés France (Grenoble II – France). Coordenador do Programa de Pós-graduação do Centro de Pós-graduação e Pesquisa em Administração da Universidade Federal de Minas Gerais (CEPEAD/UFMG).

Marina da Silva Borges de Araújo, Universidade Federal de Minas Gerais

Bacharel em Ciências Econômicas pela Universidade Federal de Minas Gerais (UFMG). Pesquisadora/Economista da Fundação Dom Cabral.

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Published

2008-08-28

Issue

Vol. 9 No. 3 (2008)

Section

Presentation

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