The effects of information environment on internal and external financing choices

Li-Kai Liao and Victoria S.P. Wang

International Journal of Business Excellence, 2024, vol. 33, issue 1, 142-167

Abstract: This study examines the effects of the overall information environment on the choices of internal/external funding choices and on the decisions of debt/equity financing (Myers and Majluf, 1984). The empirical findings, whether the combination of all financial deficits or its four components, support the pecking order theory in the perspective of overall information environment. However, the pecking order behaviour does not hold if firms are under financial distress. After classifying sample into good/bad information environment, the results are consistent with the full sample. No evidence supports the pecking order theory when considering the persistence of financing policy.

Keywords: internal financing; external financing; information environment; financial deficits; pecking order theory. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbexc:v:33:y:2024:i:1:p:142-167

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