This research discusses about debt capacity of the firms and the test of pecking order theory of non-financial firms listed at Indonesia Stock Exchange from 2006-2010. Classification of firms by its debt capacity is needed to examine the relationship between financing deficit towards long-term debt issue according to the pecking order model. The result shows that classifying firms by its debt capacity made a significant improvement of pecking order model to distinguish financing decision of the firms. Firms with high level of debt capacity prefer to issue debt than firms with low level of debt capacity when facing financing deficit.
|Journal||Jurnal Siasat Bisnis|
|Publication status||Published - 2013|