Adherence to the Pecking Order in Deficit and Surplus Conditions: A Comparative Study of Firms in India and China

IF 0.8 Q4 BUSINESS, FINANCE

Asian Journal of Business and Accounting Pub Date : 2018-12-18 DOI:10.22452/AJBA.VOL11NO2.2

Vandana Bhama, P. Jain, Surendra S. Yadav

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引用次数: 2

Abstract

Manuscript type: Research paper Research aims: This study examines firms’ adherence to the pecking order in deficit and surplus situations by comparing firms in India and China. It also examines the extent of debt issues and redemption when the deficits and surpluses are relatively large in amount. Design/Methodology/Approach: This study analyses the data of the Bombay Stock Exchange (BSE) 500 index and the Shanghai Stock Exchange (SSE) 380 index firms. It uses Ordinary Least Square (OLS) regression to examine the effect of deficit and surplus on debt issuance and redemption. Research findings: The findings indicate that deficit firms in India as well as China adhere to the pecking order by issuing large amounts of debt. The debt issues (short-term debt) are exceptionally higher among Chinese firms whereas Indian firms issue more longterm debts. In addition, Chinese firms prefer to utilise new funds to redeem the existing debts because most of their debts are short term whereas Indian firms use a major chunk of their proceeds to finance deficits. Chinese surplus firms do not retain sizeable funds, an overwhelming proportion of these funds is used to redeem their existing short-term debts. In contrast, Indian surplus firms are reluctant to retire debts at a fast pace because of the existing low debt to equity ratios. Indian firms also have more long-term debts in their capital structure. Theoretical contribution/Originality: This study extends on previous works on the pecking order theory in developing countries by splitting the analysis into two: deficit firms and surplus firms. Practitioner/Policy implications: This study provides insights into the financing practices of the two developing economies. It also highlights the differences in corporate financing of these two countries. Research limitations/Implications: This study is confined to only Indian and Chinese firms. It mainly focusses on dataset that have been accumulated over a period of 12 years only. Future studies may consider adding the financing cost aspect so as to generate a more impressive analysis of firms’ adherence to the pecking order theory. Keywords: Pecking Order Theory, Financing, Deficit, Surplus, Debt, EquityJEL Classification: Q14, G32

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在赤字和盈余条件下坚持“掠夺秩序”：印度和中国企业的比较研究

手稿类型：研究论文研究目的：本研究通过比较印度和中国的企业，考察了企业在赤字和盈余情况下对等级制度的遵守情况。它还考察了赤字和盈余相对较大时债务发行和赎回的程度。设计/方法/方法：本研究分析了孟买证券交易所（BSE）500指数和上海证券交易所（SSE）380指数公司的数据。它使用普通最小二乘回归来检验赤字和盈余对债务发行和赎回的影响。研究结果：研究结果表明，印度和中国的赤字公司都通过发行大量债券来遵守优先顺序。中国公司的债务发行量（短期债务）特别高，而印度公司发行的长期债务更多。此外，中国公司更喜欢使用新资金来偿还现有债务，因为它们的大部分债务都是短期的，而印度公司则将其大部分收益用于弥补赤字。中国盈余企业没有保留大量资金，这些资金中绝大多数用于偿还现有的短期债务。相比之下，印度盈余公司不愿意快速偿还债务，因为现有的低负债与股本比率。印度公司的资本结构中也有更多的长期债务。理论贡献/独创性：本研究通过将分析分为两部分：赤字企业和盈余企业，扩展了以往关于发展中国家等级制度理论的工作。从业者/政策含义：本研究深入了解了两个发展中经济体的融资实践。它还强调了这两个国家在企业融资方面的差异。研究局限性/影响：本研究仅限于印度和中国公司。它主要关注仅在12年内积累的数据集。未来的研究可能会考虑增加融资成本方面，以便对企业遵守等级制度理论的情况进行更令人印象深刻的分析。关键词：挑剔顺序理论，融资，赤字，盈余，债务，股票JEL分类：Q14，G32

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来源期刊

Asian Journal of Business and Accounting BUSINESS, FINANCE-

CiteScore

2.00

自引率

11.10%

发文量

期刊介绍： An academic journal that aims to advance knowledge in the business and accounting disciplines, to narrow the gap between theory and practice, and to set direction for policy initiatives in Asia. Welcome to the Asian Journal of Business and Accounting (AJBA). AJBA is an international refereed journal, published biannually (30th June and 30th December) by the Faculty of Business and Accountancy, University of Malaya, Malaysia. AJBA aims to publish scholarly business researches that are relevant to Malaysia and the Asian region. It intends to highlight the practical implications in promoting better business decision making process and the formulation of public policy in Asia. This journal publishes theoretical, conceptual, and empirical papers within the broad areas of business and accounting in Asia. The AJBA covers a broad spectrum of the business and accounting disciplines. A suggestive (though not necessarily comprehensive) list of areas that would be included in this journal are: general management, strategic management, human resource management, organizational behaviour, labour and industrial relations, international business management, business communication, entrepreneurship, leadership, management science, operations management, production management, supply chain management, marketing management, brand management, consumer behaviour, information management, e-marketing, e-commerce, quality management, retailing, service marketing, hospitality management, hotel and tourism management, asset pricing, capital and money markets, corporate finance, derivatives markets, finance and banking, financial economics, etc.