Does Pecking Order Theory Hold Among Kenyan Firms?Journal: Journal of Economics and Business (Vol.3, No. 1)
Publication Date: 2020-03-30
Authors : Douglas M. Wanja Peter W. Muriu;
Page : 386-397
Keywords : Pecking Order Theory; Capital structure; Financing deficit; Panel Data;
This study examined the pecking order theory of capital structure through annual data of 37 firms listed at the Nairobi Securities Exchange for the period 2011-2016. Estimation results established a positive relationship between changes in debt and investments and a negative relationship between changes in debt and cash flows. Overall, the findings suggest that financial deficits determine net debt issues and hence a strong case for pecking order theory in Kenya in explaining capital structure decisions.
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