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Timing of Earnings and Capital Structure

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  • Miglo, Anton

Abstract

This paper shows that asymmetric information about the timing of earnings can affect corporate capital structure. It sheds some new light on two following questions: why may profitable firms be interested in issuing equity, and why does debt not necessarily signal a firm quality. These issues seem to be puzzling from the classical pecking-order theory or signalling theory point of view. The paper also contributes to the analysis of the link between debt-equity choice and subsequent performance after issue (short-term versus long-term) which has been widely discussed in empirical literature but did not get enough attention in theoretical research.

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  • Miglo, Anton, 2014. "Timing of Earnings and Capital Structure," MPRA Paper 56547, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56547
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    Cited by:

    1. Miglo, Anton, 2021. "A New Capital Structure Theory: The Four-Factor Model," MPRA Paper 105102, University Library of Munich, Germany.

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    More about this item

    Keywords

    Asymmetric information; Pecking-order theory; Signalling; Timing of earnings;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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