Analysis of Pecking Order Theory on Chinese Listed Companies

This study tests the order of firms’financing choices based on a sample consists of 150 Chinese listed companies.And it indicates that China’s listed companies did not follow the theoretical‘Pecking Order’(Myers,1984),but a‘new order’—internal fund,equity,and debt—to make their financial choices.This is because firm’s gearing ratio and solvency did not show a high degree of correlation in China’s capital market,which leads to the preference of using equity.Besides,there are some other reasons:low cost of issuing equity,ineffective financial management,immaturity of capital market,not well developed bond market,and lack of an effective credit rating system。