How Persistent Is the Impact of Market Timing on Capital Structure?
AbstractThis paper examines the capital structure implications of market timing. I isolate timing attempts in a single major financing event, the initial public offering, by identifying market timers as firms that go public in hot issue markets. I find that hot-market IPO firms issue substantially more equity, and lower their leverage ratios by more, than cold-market firms do. However, immediately after going public, hot-market firms increase their leverage ratios by issuing more debt and less equity relative to cold-market firms. At the end of the second year following the IPO, the impact of market timing on leverage completely vanishes. Copyright 2006 by The American Finance Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 61 (2006)
Issue (Month): 4 (08)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Yang Ni & Shasha Guo & David E. Giles, 2009.
"Capital Structures in an Emerging Market: A Duration Analysis of the Time Interval Between IPO and SEO in China,"
Econometrics Working Papers
0905, Department of Economics, University of Victoria.
- Yang Ni & Shasha Guo & David Giles, 2010. "Capital structures in an emerging market: a duration analysis of the time interval between IPO and SEO in China," Applied Financial Economics, Taylor & Francis Journals, vol. 20(19), pages 1531-1545.
- W. Allard Bruinshoofd & Leo de Haan, 2012.
"Market timing and corporate capital structure: a transatlantic comparison,"
Taylor & Francis Journals, vol. 44(28), pages 3691-3703, October.
- Allard Bruinshoofd & Leo de Haan, 2007. "Market timing and corporate capital structure - A transatlantic comparison," DNB Working Papers 144, Netherlands Central Bank, Research Department.
- Gerhard Kling & Utz Weitzel, 2010.
"Endogenous mergers: bidder momentum and market reaction,"
Applied Financial Economics,
Taylor & Francis Journals, vol. 20(3), pages 243-254.
- Gerhard Kling & G.U. Weitzel, 2009. "Endogenous mergers: bidder momentum and market reaction," Working Papers 09-22, Utrecht School of Economics.
- Duc Khuong Nguyen & Adel Boubaker, 2009. "Does financing behavior of Tunisian firms follow the predictions of the market timing theory of capital structure?," Economics Bulletin, AccessEcon, vol. 29(1), pages 169-181.
- Zhaoxia Xu, 2009. "The Impact of Market Timing on Canadian and U.S. Firms' Capital Structure," Working Papers 09-1, Bank of Canada.
- Elsas, Ralf & Florysiak, David, 2008. "Empirical Capital Structure Research: New Ideas, Recent Evidence, and Methodological Issues," Discussion Papers in Business Administration 4743, University of Munich, Munich School of Management.
- Alessandro Fiaschi, 2009. "Managerial discretion and optimal financing policies with cash flow uncertainty," Working Papers 3, Doctoral School of Economics, Sapienza University of Rome.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.