Does equity market timing have a persistent impact on capital structure? Evidence from China

Zhao, Yang; Lee, Cheng-Few; Yu, Min‐Teh

doi:10.1016/j.bar.2019.100838

Cited by 8 publications

(6 citation statements)

References 31 publications

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“…In other words, firms can permanently lower their leverage by timing the equity markets (i.e., by issuing equity when their market values are high relative to book or past market values). Also, Zhao et al (2020), prove that the effect of equity market timing on firm's capital structure exists for more than 7 years.…”

Section: Persistence Of the Impactmentioning

confidence: 90%

“…Although several authors have found some evidence of market timing effects on capital structure in the 80s and 90s of the 20 th century (e.g., Jalilvand and Harris, 1984;Rajan and Zingales, 1995;Pagano et al, 1998), more formal definitions were only developed by Baker and Wurgler (2002) and Alti (2006). These works led to several publications on this topic, which still receives lots of attention nowadays (e.g., Dong et al, 2020;Zhao et al, 2020;Cerpentier, et al, 2021;Gomes et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

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Impact of Market Timing on Corporate Capital Structure: Evidence from the UK IPO Market

Gonçalves¹,

Cerqueira²

2021

R. Econ. and Finan.

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This study examines the impact of market timing on corporate capital structure throughout the analysis of the IPO market in the UK. It should be noted that due to its cyclical activity, the IPO market is considered as a natural place to detect market timing effects.In line with previous literature, this study considers the hot and cold classification as the equity timing measure. Market timers are identified as firms that go public in hot markets. Hot markets are characterised by periods of unusually high IPO volume and underpricing, usually on the back of the more favourable market conditions. On the contrary, cold markets are portrayed by opposite market conditions.The main findings of this study show that, in the offering year, hot-market firms issue more equity and experience a larger decrease in their leverage ratios in comparison with cold-market firms. However, right after going public, hotmarket firms start to increase their leverage ratios at a higher pace than their cold-market counterparts. Five years following the IPO, the difference in the leverage ratio when compared to the pre-issue level becomes slightly higher for cold-market firms, suggesting that the changes on leverage stop being driven by the market timing factor. These findings are consistent with the view that the impact of market timing on capital structure is not persistent over time.Different econometric models were computed to test the research hypotheses. Also, the Huber-White estimator was applied to correct the error structure, ensuring that our findings were not biased by heteroscedasticity and error correlation. In addition, industry-fixed effects were included to control for cross-sectional heterogeneity.

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Section: Persistence Of the Impactmentioning

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Impact of Market Timing on Corporate Capital Structure: Evidence from the UK IPO Market

Gonçalves¹,

Cerqueira²

2021

R. Econ. and Finan.

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“…Teori lain terkait dengan keputusan pendanaan adalah market timing theory (Zhao et al, 2020;Muhammad et al, 2021;Ratih, 2021). Market timing ekuitas menunjukkan praktik yang dilakukan oleh perusahaan dengan menerbitkan saham pada saat harga (nilai) pasar ekuitas tinggi dan melakukan pembelian kembali saham pada saat harganya rendah.…”

Section: Pendahuluanunclassified

“…Praktek market timing ini sering dilakukan dalam pengambilan keputusan keuangan, antara lain dilakukan oleh Chief Executive Officer (CEO) perusahaan (Thu Luu & Duong Dang, 2022), maupun oleh manajer investasi yang mengelola reksadana (Cagnazzo, 2022) Penelitian mengenai pengaruh equity market timing terhadap struktur modal sebelumnya telah dilakukan oleh beberapa peneliti dan menunjukkan hasil yang berbeda. Gomes et al (2019), Zhao et al, (2020) 2018) yang menunjukkan bahwa perusahaan di Indonesia tidak menerapkan teori market timing dalam pengambilan keputusan pendanaan. Perusahaan yang memilih memakai pembiayaan bersumber dari ekuitas ternyata cenderung mempunyai biaya ekuitas yang cukup tinggi pula dan tidak diperngaruhi oleh keberadaan suatu kejadian ekonomi tertentu.…”

Section: Pendahuluanunclassified

“…Pemilihan proksi ini sesuai pula dengan (Ratih, 2021) yang menyatakan bahwa market to book ratio dapat mengungkap fenomena market timing dan dampaknya terhadap struktur modal. Dengan mengacu pada (Allini et al, 2018) (Zhao et al, 2020) (Ratih, 2021) maka external finance weighted average market to book ratio diukur menggunakan persamaan sebagai berikut : (5) d. Growth Opportunity, menunjukkan peluang pertumbuhan yang dimiliki oleh perusahaan (Huang et al, 2021).…”

Section: Definisi Operasional Dan Pengukuran Variabelunclassified

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Pengaruh Equity Market Timing Terhadap Struktur Modal Perusahaan Manufaktur di Bursa Efek Indonesia

Alteza

Hidayah²

2022

ekuitas

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This study aims to determine the effect of equity market timing on the capital structure of manufacturing companies that conducted initial public offerings on the Indonesia Stock Exchange. The population in this study is the manufacturing sector companies that conduct initial offerings on the Indonesia Stock Exchange in the 2010-2015 periods. Sampling was done using the purposive sampling method. Based on the criteria, 18 companies became the research sample. Capital structure in this study is proxied by leverage while equity market timing is proxied by the market-to-book ratio. The data analysis technique used is linear regression analysis with panel data estimation. Prior to the regression analysis, the model specification test and classical assumption test were carried out to ensure that the research model was feasible to use. The results of this study indicate that equity market timing has a negative and significant effect on the company's capital structure.

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Impact of information disclosure ratings on investment efficiency: evidence from China

Chen

et al. 2022

Rev Quant Finan Acc

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Does equity market timing have a persistent impact on capital structure? Evidence from China

Cited by 8 publications

References 31 publications

Impact of Market Timing on Corporate Capital Structure: Evidence from the UK IPO Market

Impact of Market Timing on Corporate Capital Structure: Evidence from the UK IPO Market

Pengaruh Equity Market Timing Terhadap Struktur Modal Perusahaan Manufaktur di Bursa Efek Indonesia

Impact of information disclosure ratings on investment efficiency: evidence from China

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