Question

According to the pecking order theory, debt financing and internal financing are superior to equity financing, but we know that many great companies are public companies, such as Apple and Google. Therefore, going public must have some benefits beyond this theory. Please use some listed companies you are familiar with to illustrate the benefits of equity financing.

Question:

1.In addition to the goal of raising money, how can these companies benefit from going public?

2.As far as you know, do companies in Thailand follow the pecking order theory to raise funds for selected investments?

Answer 1

1. Listing company publicly helps in-

A. Access to wise gambit of securities and hybrid instruments.

B. Enhances liquidity for a company as it can be raised as and when needed.

C. Company May have easy access to global markets and global investors.

D. There is improved transparency and disclosure requirements.

E . There is a high employee morale of the company workforce as they believe they work for a more reliable listed company.

2. A few companies which are not listed are majorly focused at debt and internal methods of financing in Thailand.

But majority of the companies who are listed donot go for pecking theory as they have high access to global markets equities.