Abstract
We extend the evidence of Fama and French (1995) on the post-1962 profitability and equity financing of firms in different style groups (small versus big, value versus growth) to 1926-2006. The emphasis is on whether equity-financed investment varies with cashflows and price-to-book ratios in ways that support or violate the pecking order model of Myers (1984) or the Q theory of investment. The long-term perspective from the results for 1926-2006 provides insights into inferences about the pecking order and Q theory drawn from previous work that focuses on shorter, more recent periods.
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