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Article in Journal

Pecking order and market timing theory in emerging markets: The case of Egyptian firms (Forthcoming/Available Online)

Citation
Allini A, Rakha S, McMillan D & Caldarelli A (2017) Pecking order and market timing theory in emerging markets: The case of Egyptian firms (Forthcoming/Available Online), Research in International Business and Finance.

Abstract
Using a unique dataset of 1270 Egyptian listed firm-year observations over 2003-2014, we investigate whether the basic premises according to the pecking order or market timing theories provide an explanation for the capital structure mix of Egyptian firms. Current work has provided mixed evidence in regard to these capital structure theories in the Egyptian context. Our results show that the most profitable firms are less likely to resort to external financing. However, in case where financial deficits exist then equity issued appears to track the deficit rather than debt. Moreover, issuances appear to track deficit periods instead of market timing attempts. Results obtained support notion that the typical Egyptian firm follows revised pecking order theory, with the importance of the four conventional determinants, profitability, tangibility, size effect and growth opportunity in debt holdings. © 2017 Elsevier B.V.

Keywords
Capital structure; Pecking order theory; Market timing theory; Egypt

StatusIn press
AuthorsAllini Alessandra, Rakha Soliman, McMillan David, Caldarelli Adele
Publication date online08/07/2017
Date accepted by journal03/07/2017
PublisherElsevier
ISSN 0275-5319
LanguageEnglish

Journal
Research in International Business and Finance (2017)

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