Abstract
In contrast to the existing empirical research on the pecking order hypothesis which has been largely confined to the United States and a few other advanced countries, this article attempts to test the hypothesis for an emerging economy through a case study of the Indian corporate sector. A well diverse sample of 556 manufacturing firms over the period 1997–2007 is used in the article to test the pecking-order hypothesis. The study finds strong evidence in favour of the pecking-order hypothesis—a result that stands startlingly odd against the most recent evidence against the pecking-order theory in developed countries (Fama and French 2005; Frank and Goyal 2003; Leary and Roberts 2004; Lemmon and Zender 2004). JEL Classification: G32
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