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The Impact of Market Timing on Canadian and U.S. Firms' Capital Structure

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  • Zhaoxia Xu
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    Abstract

    This paper studies the impact of market timing on Canadian firms' capital structure and makes a comparison with U.S. firms. There is no evidence that market timing affects Canadian firms' capital structure in the same manner as it affects their U.S. counterparts. The effect of past equity issues on Canadian firms' capital structure is transitory. Canadian firms adjust at a faster rate toward the leverage target than U.S. firms. These results challenge the generality of the market-timing theory of capital structure.

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    File URL: http://www.bankofcanada.ca/wp-content/uploads/2010/02/wp09-1.pdf
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    Bibliographic Info

    Paper provided by Bank of Canada in its series Working Papers with number 09-1.

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    Length: 41 pages
    Date of creation: 2009
    Date of revision:
    Handle: RePEc:bca:bocawp:09-1

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    Keywords: Financial markets; International topics;

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