Abstract:
The capital structure of a company shows the proportion of debt-equity mix, vital for any organization regardless
of the size of the firm. This is because capital structure is directly linked to the cost of capital and hence the
organization’s performance and survival. However, there is a vacuum in the Sri Lankan context, only few studies
have supported the capital structure in nonfinancial firms in the CSE. Hence, the main objective of this study
was to assess the adoption of pecking order theory in non-financial listed companies in Sri Lanka. The study
employed secondary data, by selecting 70 companies representing 10 sectors of listed companies in the Colombo
Stock Exchange for the period of 2009 - 2014, in order to achieve the objective of the study. And the study used
descriptive, correlation and regression statistics for data analysis. The findings of the study revealed that Pecking
Order Theory in its weak form is supported by Sri Lanka listed firms capital structure. The results of this study
will help policy makers in defining policies and procedures to ensure reliability and easy accessibility to different
sources of finance for the Sri Lanka listed companies
