THE PECKING ORDER THEORY AND LIFE CYCLE: EVIDENCE FROM FRENCH FIRMS

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Lamia Mabrouk , Adel Boubaker

DOI:10.22495/cocv16i3art2

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Abstract

Contrary to the trade-off theory, pecking order theory is based on the information asymmetry that exists between internal stakeholders (owners, managers) and external stakeholders (donors) to the company. We study firms’ financing behaviour over life cycle stages in the context of the pecking order theory. This paper is interested in testing the relation between ownership structure, the life cycle and the funding classification in French companies in the period 2005-2014. The hypotheses tested were derived from the pecking order models and analysis was conducted on data panel with econometric software Stata. The results show that the pecking order explains the debt in French companies that are in growth phase, maturity or decline.

Keywords: Capital Structure, Pecking Order, Life Cycle, Growth, Maturity

JEL Classification: G32, G40

Received: 31.01.2019

Accepted: 21.03.2019

Published online: 22.03.2019

How to cite this paper: Mabrouk, L., & Boubaker, A. (2019). The pecking order theory and life cycle: Evidence from French firms. Corporate Ownership & Control, 16(3), 20-28. http://doi.org/10.22495/cocv16i3art2