Testing Pecking Order Theory

Student: Vanuyto Arina

Supervisor:

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Economics (Bachelor)

Year of Graduation: 2024

This study investigates applicability of the pecking order theory of capital structure on Russian companies. The pecking order theory is one of the main theories of capital structure. It states that firms have preference in sources of financing. Internal sources are used first, and then external sources, such as debt, followed by equity. The pecking order theory has not been studied much on Russian companies as existing studies are mainly related to finding factors influencing financial leverage or used on long-standing data. Panel regression with fixed effects was evaluated on a sample of non-financial public Russian companies from 2018 to 2021. The results show that the choice of capital structure is partially characterized by the pecking order theory.

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