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Market timing and corporate capital structure: a transatlantic comparison

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  • W. Allard Bruinshoofd
  • Leo de Haan

Abstract

This article provides comparative international evidence on the effect of market timing on corporate capital structures using panel data for US, UK and continental European firms. We document that the empirical regularity found for US firms, that historical market-to-book ratios and corporate leverage correlate negatively does not extend to UK and continental European firms. The latter tend to raise debt rather than equity when stock prices are high, thus sticking more closely to a pecking order in which debt is preferred over external equity.

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File URL: http://hdl.handle.net/10.1080/00036846.2011.581211
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 44 (2012)
Issue (Month): 28 (October)
Pages: 3691-3703

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Handle: RePEc:taf:applec:44:y:2012:i:28:p:3691-3703

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Cited by:
  1. Sibel ÇELÝK & Yasemin Deniz AKARIM, 2013. "Does Market Timing Drive Capital Structure? Empirical Evidence from an Emerging Market," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 140-152.
  2. Ramzi Drissi & Tarek Ghazouani & Assaad Ghazouani, 2013. "Financial Decision of Tunisian Firms in the Context of Market Timing Theory," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 923 - 931.

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