An Analysis of Pecking Order Theory With the Analytic Hierarchy Process

Author:

Altin Hakan1ORCID

Affiliation:

1. University of Aksaray, Turkey

Abstract

According to pecking order theory (POT), when a company feels the need for capital, it applies the hierarchies of accounts payable and accruals, retained earnings, debt, and new common stock. Similarly, the analytic hierarchy process (AHP) method calculates the hierarchical priorities for the solution of complex problems. The most important justification explaining the hierarchy implementation of the POT approach are the impacts of asymmetrical information and signaling. Similarly, in the AHP method, the hierarchical decision-making process depends on the justification of the decision maker. The existence of asymmetrical information shows that the two methods complete each other. The aim of the study was to analyze POT with the AHP method, in other words, an examination of the consistency of the POT and AHP approaches with each other. The results showed that the two methods are indeed consistent with each other.

Publisher

IGI Global

Subject

Materials Science (miscellaneous)

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