How Persistent Is the Impact of Market Timing on Capital Structure?
Year: 2006
Type: article
Abstract: ABSTRACT This paper examines the capital structure implications of market timing. I isolate timing attempts in a single major financing event, the initial public offering, by identifying market timers as firms that go public in hot issue markets. I find that hot‐market IPO firms issue substantially more equity, and lower their leverage ratios by more, than cold‐market firms do. However, immediately after going public, hot‐market firms increase their leverage ratios by issuing more debt and less equity relative to cold‐market firms. At the end of the second year following the IPO, the impact of market timing on leverage completely vanishes.
Source: The Journal of Finance
Author: AYDOĞAN ALTI
Institutions: University of Virginia, The University of Texas at Austin
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3125934511