Pecking Order among Select Industries from India and China

Vandana Bhama, P.K. Jain and Surendra S. Yadav

Vision, 2017, vol. 21, issue 1, 63-75

Abstract: The present article tests the pecking order of various industries from India and China. Firms in each industry have been segregated into deficit and surplus groups. The empirical findings indicate that a large number of industries from India and China adhere perfectly to the pecking order during deficiency. Borrowings through long-term debt are more among Indian deficit industries, whereas Chinese industries borrow more short-term debt. The debt issues are considerably large among Indian construction, metal and transport industries, and Chinese electrical and metal industries. During deficiency, Indian industries do not redeem debt with significant amount, while most of the Chinese industries utilize a significant portion of new debt issues to retire existing debt due to heavy reliance on short-term debt and therefore, industries perforce are to redeem more debt. In a surplus situation, the pecking order results indicate mixed evidence pertaining to the pecking order behaviour of Indian as well as Chinese industries. The results are robust for Indian chemicals and information and communications technology (ICT) surplus industries and Chinese metal, pharmaceutical and chemicals industries.

Keywords: Pecking Order Theory; Debt; Industry; India; China (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:vision:v:21:y:2017:i:1:p:63-75

DOI: 10.1177/0972262916681255

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