Pecking order theory suggests that

Pecking order theory suggests that a firm's growth is negatively related to its capital structure. According to Myers and Majluf 1984, information asymmetry demands an extra premium for firms to raise external funds, irrespective of the true quality of their investment project. In the case of issuing debt, the extra premium is reflected in the higher required yield. High-growth firms may find it too costly to rely on debt to finance growth.

Pecking order theory suggests that a firm's growth is negatively related to its capital structure. According to Myers and Majluf 1984, information asymmetry demands an extra premium for firms to raise external funds, irrespective of the true quality of their investment project. In the case of issuing debt, the extra premium is reflected in the higher required yield. High-growth firms may find it too costly to rely on debt to finance growth.

Pecking order theory suggests that a firm 's growth is negatively related to its capital structure. According to Myers and. Majluf 1984 information asymmetry, demands an extra premium for firms to raise external funds irrespective of, the true. Quality of their investment project. In the case of, issuing debt the extra premium is reflected in the higher required. Yield.High-growth firms may find it too costly to rely on debt to finance growth.