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

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Author Info
Zhaoxia Xu
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/en/res/wp/2009/wp09-1.pdf
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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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Related research
Keywords: Financial markets; International topics;

Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
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    Other versions:
  19. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May. [Downloadable!] (restricted)
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This page was last updated on 2009-11-24.

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