On the Interpretable Power of the Pecking Order Theory to the Financing Behavior of the Listed Companies in China

With the samples of 531 listed companies from 1998 to 2006,based on the modified S-M model and panel data of 9 years,the paper tries to examine on the interpretable power of the Pecking Order Hypothesis about the financing behavior of the listed companies in China. The paper finds that the financing order is equity financing,debt financing and internal financing. The order is not consistent with the Pecking Order Theory. Further subgroup analyses indicate that internal financial has a significant positive correlation with the financial deficit among the low-leverage and large-scale corporation,and has a significant negative correlation among the high-leverage and small-scale corporation. Finally,the paper also finds that debt financing preference of lowleverage corporation is more than high-leverage corporation's,and debt financing preference of large-scale corporation is more than small-scale corporation's. The paper provides some useful experience evidence which could help to understand the financing behavior of the listed companies and improve the supervision of capital market in China.