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Market timing and corporate capital structure - A transatlantic comparison

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Author Info
Allard Bruinshoofd
Leo de Haan

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Abstract

This paper conducts a transatlantic comparison of market timing effects on corporate capital structures, using some 45,000 observations on US, UK, and continental European firms. We confirm the empirical regularity that leverage and historical market-to-book ratios connect negatively in the US, but also document that this result does not extend to continental European and UK firms in general. The latter result is in line with the scarce empirical evidence for a few smaller European countries, and corroborates the ‘enhanced' pecking order hypothesis of Högfeld and Oborenko (2005). The few market timing effects on European firms' capital structures that we find are specific to ICT firms and the ICT boom episode.

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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 144.

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Date of creation: Aug 2007
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Handle: RePEc:dnb:dnbwpp:144

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Related research
Keywords: Market Timing; Capital Structure; ICT.;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
G3 - Financial Economics - - Corporate Finance and Governance

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