The Capital Structure Puzzle - MYERS - 1984 - The Journal
majluf and i discuss several possible objectives managers might pursue in this situation. the one we think makes the most sense is maximizing the “true,” or “intrinsic” value of the firm's existing shares. that is, the manager worries about the value of the “old” shareholders' stake in the firm.
pecking order theory was first suggested by donaldson in 1961 and it was modified by stewart c. myers and nicolas majluf in 1984. it states that companies prioritize their sources of financing (from internal financing to equity) according to the cost of financing, preferring to raise equity as a financing means of last resort. hence, internal
Pecking Order Theory - Overview, Illustration, Example
what is the pecking order theory? the pecking order theory, also known as the pecking order model, relates to a company’s capital structure capital structure capital structure refers to the amount of debt and/or equity employed by a firm to fund its operations and finance its assets. the structure is typically expressed as a debt-to-equity or debt-to-capital ratio.
pecking order theory is a theory related to capital structure.it was initially suggested by donaldson. in 1984, myers and majluf modified the theory and made it popular.according to this theory, managers follow a hierarchy to choose sources of finance.the hierarchy gives first preference to internal financing.
Corporate Financing and Investment Decisions When Firms
machine-readable bibliographic record - marc, ris, bibtex document object identifier (doi): 10.3386/w1396. published: majluf, nicholas s. and stewart c. myers. "corporate financing and investment decisions when firms have information that investors do not have," journal of financial economics, vol. 13, no. 2, 1984, pp. 187-221.