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Does market timing persistently affect capital structure? Evidence from stock market liberalization

Listed author(s):
  • Huang, I-Hsiang
Registered author(s):

    Utilizing stock-market liberalization, we test whether managers exploit favorable market conditions to time their firms' IPOs, and whether or not the timing will have a persistent, negative impact on leverage. Using a sample of 235 Taiwanese IPOs over the 10-year period surrounding the first liberalization in the Taiwan stock market, a high-volatility, high-turnover, high-individual-trading emerging market, we first show that liberalization substantially reduces the cost-of-equity capital. We then provide evidence that the going-public decision for post-liberalization IPOs is consistent with equity market timing, but that it fails to influence the debt ratio.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X13000899
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    Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

    Volume (Year): 26 (2014)
    Issue (Month): C ()
    Pages: 123-144

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    Handle: RePEc:eee:pacfin:v:26:y:2014:i:c:p:123-144
    DOI: 10.1016/j.pacfin.2013.12.001
    Contact details of provider: Web page: http://www.elsevier.com/locate/pacfin

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