Testing the Pecking Order Theory on Select Indian Corporates

Abstract

This paper tests the presence of the pecking order on a sam ple consisting of non-financial companies constituting the BSE-100 index of the Bombay Stock Exchange over the period 2003-2012. The model applied to test the pecking order theory is based on the one developed by Shyam-Sunder and M yers (1999) which considers companies with financial deficit. The authors venture further in studying the relationship of companies with financial surplus also, with the variables under consideration. According to our findings, debt issue tracks the financing deficit most closely.