The influence of growth opportunities on the determinants of financing decisions : Evidence from Thai listed firms


  • Thanida Chitnomrath Dhurakij Pundit University


The Pecking Order Theory, Firm Characteristics, Financing Decisions, Growth Opportunities


This study tests whether the determinants of financing decisions vary with the influence of growth opportunities. It is hypothesized that firms with different growth opportunities may have different financing decisions determinants. The study first investigates the determinants of financing decisions according to the pecking order theory’s predictions and finds that six firm characteristics including firm size, liquidity, financial risk, fixed assets, profitability, and dividend policy are the significant determinants of financing decisions in the sample of 220 Thai listed firms during the period 2005-2007. The results show that Thai listed firms in the sample make financing decisions following the conceptual framework of the pecking order theory. Then, the sample is partitioned into positive- and negative-growth firms by the growth rate of earnings after tax to examine the determinants of financing decisions in each sub-sample. The results from analysis show that there are some differences as to the determinants of financing decisions in the two types of firms. The results for positive-growth firms are in line with the results of the whole sample while the results for negative-growth firms are different. Two firm characteristics - profitability and dividend policy are not included in the significant financing decisions determinants of negative-growth firms, only firm size, liquidity, financial risk, and fixed assets are the significant determinants of financing decisions for negative-growth firms. This discovery supports hypotheses of the study, indicating that the determinants of financing decisions in positive-growth firms are stronger than those of negative-growth firms. Thus, managers of Thai listed firms should take this into account when implementing financing strategies.


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How to Cite

Chitnomrath, T. (2020). The influence of growth opportunities on the determinants of financing decisions : Evidence from Thai listed firms. Suthiparithat, 23(70), 23–44. Retrieved from



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