Does Market Timing Affect Capital Structure?: Evidence for Chinese Firms

Philip,; Russel,; Ken,; Hung, Jui-Chung

doi:10.17265/1537-1506/2013.06.002

Cited by 3 publications

(5 citation statements)

References 10 publications

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“…The findings, however, indicated that in China, there was a persistent effect of market timing on CS. Hence, Russel and Hung's (2013) findings differ from Ma and Rath's (2016) findings.…”

Section: Introductionmentioning

confidence: 74%

“…Using a sample from 1992 to 2007, Russel and Hung (2013) obtained the results that the historical marketto-book ratio of the previous year measured using a yearly timing proxy and it had a negative effect on BL at IPO+3, whereas using a long-term timing proxy, it had a positive effect on BL at an IPO+2 up to IPO+10. This finding concluded that there was no persistent effect of market timing on CS in China.…”

Section: Introductionmentioning

confidence: 99%

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The persistent effect of equity market timing on capital structure during right issue

Pamungkas

Supriyono

Rahayu

2023

IJAEFA

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This research aims to find empirical evidence of the persistent effects of market timing equity on capital structure (CS) in Indonesia as measured by book leverage (BL) and market leverage (ML) due to inconsistent results of previous studies, both inside and outside Indonesia. The data was collected from companies that published the right issue (RI) from 2000 to 2019 and listed on Indonesia Stock Exchange. The companies which were used as sample, they had leverage higher than 1. The hypothesis was examined using two types of regression analysis: ordinary least squares regression to examine cross-section and Fama-McBeth regression for testing the panel data. The results of this research uncovered the persistent effect of equity market timing on the capital structure using BL and ML at RI+1, RI+2, RI+3, RI+4, RI+5, and in total, from RI+1 to RI+5. Moreover,a two-pair sample t-test was used to analyze the issuance of new shares or new debt. The results revealed that when RI+1 used ML and RI+3 used BL and ML, the company issued new shares (NEI) in large numbers, so debt issues (NDI) decreased. Further, this research is beneficial for companies to determine the right time during a rights issue to obtain a high share price so that the cost of share capital remains low.

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“…The findings, however, indicated that in China, there was a persistent effect of market timing on CS. Hence, Russel and Hung's (2013) findings differ from Ma and Rath's (2016) findings.…”

Section: Introductionmentioning

confidence: 74%

Section: Introductionmentioning

confidence: 99%

The persistent effect of equity market timing on capital structure during right issue

Pamungkas

Supriyono

Rahayu

2023

IJAEFA

View full text Add to dashboard Cite

show abstract

“…Russel and Hung studied Chinese firms from 1992 to 2007 and finds that the effects are evident in the first few years but disappear after IPO + 3. However, Russel and Hung do recognize that the dynamics of the Chinese market could be influenced by government regulations on the timing of security issuance and market timing cannot be effectively performed; thus, influencing its impacts on capital structure [12]. Nevertheless, Chinese data is not unaccompanied.…”

Section: Market Timing Theorymentioning

confidence: 99%

A Critical Review of the Effects of Stock Returns and Market Timing on Capital Structure

Ye,

Ji,

Zou

2023

Advances in Economics, Business and Management Research

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Capital structure is regarded as the combination of debt and equity firms use to finance operations and investments. The choice of capital structure significantly impacts a company's cost of capital, profitability, and risk profile. Among a series of factors that affect capital structure, this paper focuses on stock returns and market timing. In this review, an array of papers is analyzed to summarize current research claims regarding the influence of stock returns and market timing on capital structure. This paper also touches on other theories like the trade-off theory, the pecking order theory, and the signaling theory.

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“…This theory was conceptualized by Baker and Wurgler (2002) to find cheaper types of financing regardless of their current internal resources, debt levels, and equity capital. A growing number of studies have applied this theory to explain the capital structure of companies during the global financial crisis (Bolton et al, 2013;Russel & Hung, 2013). According to Wang et al (2007), the marketing timing theory is the main determinant of the financial policy of a company and has a lasting impact on the management of working capital.…”

Section: Market Timing Theorymentioning

confidence: 99%

“…The marketing timing theory is the main determinant of the financial policy of a company and has a lasting impact on the management of working capital during the global financial crisis (Bolton et al, 2013;Russel & Hung, 2013).…”

Section: Market Timing Theorymentioning

confidence: 99%

Impact of Covid-19 on Working Capital Management: A Theoretical Approach

Olowookere,

Odetayo,

Adeyemi

et al. 2021

JoBE

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This study uses an archival technique to examine the impact of COVID-19 on working capital management. The study reviews previous research published in high-impact journals between 2000 and 2021. In addition, the study uses the risk trade-off theory, market timing theory, and cash conversion cycle theory as lenses to understand the relationship between COVID-19 and working capital management. Both theoretical and empirical reviews indicate that the impact of the COVID19 plague has weakened the finances of business organizations on a global scale. Thus, reviewed theories suggest that for the business organizations to come into the limelight of financial muscle amidst COVID-19, managers should review variable costs and work with their main partners, and access to funds that have been made available to corporate organizations as a result of the mitigation of the COVID-19 plague.

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Does Market Timing Affect Capital Structure?: Evidence for Chinese Firms

Cited by 3 publications

References 10 publications

The persistent effect of equity market timing on capital structure during right issue

The persistent effect of equity market timing on capital structure during right issue

A Critical Review of the Effects of Stock Returns and Market Timing on Capital Structure

Impact of Covid-19 on Working Capital Management: A Theoretical Approach

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