An implication of the pecking order and market timing hypotheses is that the firm has no optimal capital structure.

Question

Quizplus · Accepted Answer

According to both the pecking order and market timing hypotheses, the firm's capital structure is determined by external factors such as availability of financing and market conditions rather than an internal target or optimal structure. Therefore, there is no one-size-fits-all solution for the optimal capital structure.

An Implication of the Pecking Order and Market Timing Hypotheses