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This study examines the applicability of pecking order theory to Turkish industrial firms listed on Borsa Istanbul (BIST) by employing the (Shyam-Sunder and Myers, J Financ Econ 51:219–244 1999) methodology. Using panel data from 127 industrial firms over a 26-year period, we test whether firms follow a hierarchical financing pattern where internal funds are preferred over external financing, and debt is prioritized over equity. Our analysis utilizes Prais–Winsten regression with panel-corrected standard errors (PCSEs) to examine the relationship between firms’ financing deficits and changes in debt levels. We further analyze this relationship across different debt maturities, industry sectors, and firm sizes. The results show a low coefficient of determination (β = 0.16) between financing deficits and debt issuance, significantly below the theoretical value of 1.0 expected under pecking order theory. This finding holds consistently across different sectoral analyses and firm sizes, with β values ranging from 0.11 to 0.35 across sectors and showing no meaningful difference between large and small firms. Our findings suggest that Turkish industrial firms do not follow the financing hierarchy predicted by pecking order theory, contributing to the growing literature on capital structure decisions in emerging markets and highlighting the need for alternative explanatory frameworks for financing behavior in the Turkish context.

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Is There a Pecking Order for Financing the Turkish Industrial Firms? An Empirical Analysis

  • 会议论文

  • 发表日期：

    2026年

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  • Özgür Becermen,
  • Juan Dempere,
  • James Harris

摘要

This study examines the applicability of pecking order theory to Turkish industrial firms listed on Borsa Istanbul (BIST) by employing the (Shyam-Sunder and Myers, J Financ Econ 51:219–244 1999) methodology. Using panel data from 127 industrial firms over a 26-year period, we test whether firms follow a hierarchical financing pattern where internal funds are preferred over external financing, and debt is prioritized over equity. Our analysis utilizes Prais–Winsten regression with panel-corrected standard errors (PCSEs) to examine the relationship between firms’ financing deficits and changes in debt levels. We further analyze this relationship across different debt maturities, industry sectors, and firm sizes. The results show a low coefficient of determination (β = 0.16) between financing deficits and debt issuance, significantly below the theoretical value of 1.0 expected under pecking order theory. This finding holds consistently across different sectoral analyses and firm sizes, with β values ranging from 0.11 to 0.35 across sectors and showing no meaningful difference between large and small firms. Our findings suggest that Turkish industrial firms do not follow the financing hierarchy predicted by pecking order theory, contributing to the growing literature on capital structure decisions in emerging markets and highlighting the need for alternative explanatory frameworks for financing behavior in the Turkish context.