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Market timing and corporate capital structure - A transatlantic comparison

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  • Allard Bruinshoofd
  • Leo de Haan

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 H�gfeld 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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Bibliographic Info

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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Keywords: Market Timing; Capital Structure; ICT.;

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Cited by:
  1. 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.
  2. 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.

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