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Equity Market Timing: Testing Using Brazilian IPOs

Author

Listed:
  • José Luiz Rossi Jr.

    (Insper Instituto de Ensino e Pesquisa)

  • Marcelo Marotta

Abstract

This paper analyzes whether the behavior related to the equity market timing affected the recent IPO wave of Brazilian firms and exerted an impact on companies'capital structure. Using data from january 2004 to december 2007 the paper classifies the months in the sample in hot or cold according the number of IPOs that took place in each month. The paper confirms an oportunistic behavior by the firms that issue a higher volume of stocks in periods classified as hot. The paper also shows that the impact of this behavior on companies` capital structure is very limited. Although there is a reduction in companies` leverage right after the IPO, this returns to its previous level only a few quarters after the IPO. (Full article available in Portuguese only)

Suggested Citation

  • José Luiz Rossi Jr. & Marcelo Marotta, 2010. "Equity Market Timing: Testing Using Brazilian IPOs," Brazilian Review of Finance, Brazilian Society of Finance, vol. 8(1), pages 85-101.
    • Handle: RePEc:brf:journl:v:8:y:2010:i:1:p:85-101
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    More about this item

    Keywords

    capital structure; market timing; indebtness; IPO; ; capital structure; market timing; indebtness; IPO;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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