Pecking order, access to public debt market, and information asymmetry
نویسنده
چکیده
Article history: Received 6 March 2012 Received in revised form 30 May 2013 Accepted 4 June 2013 Available online 11 June 2013 We suggest that the limited access to the public debt market is a reason for the violations of pecking order behavior documented in literature. We show that as information asymmetry increases, two effects take place. On the one hand, firms do desire to increase the debt issuance. On the other hand, firms start to lose their access to the public debt market. As a result, firms associated with high degrees of information asymmetry can only issue private debt and face the relatively low debt capacities provided in the private debt market. © 2013 Elsevier Inc. All rights reserved. JEL classification: G14 G32
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