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ABSTRACT
This study empirically examined the Modified Pecking Order (MPO) financing theory proposed by Myers (1984). Three slow-growing industries and the Hotel Industry that was featured by average growth were investigated. The leverage ratios of the unusually profitable firms in each industry were compared with their industry averages. The leverage uses of these firms were found significantly and consistently less than their industry averages in the three slow-growth industries. For the Hotel Industry, the difference in leverage use was less significant and consistent. The empirical evidence from this study supports the MPO theory.
