What is hierarchy of financing under 'Pecking Order' theory, and why does it exist?

(c) Hierarchy of financing Pecking order: Pecking order theory suggests that managers may use various sources for raising of fund in the following order: Managers first choice is to use internal finance.In absence of internal finance, they can use secured debt, unsecured debt, hybrid debt etc.Managers may issue new equity shares as a last option. The hierarchy of financing Pecking order exist to Minimize the cost of capital, financial control and avoiding negative market signals.