Market Timing and Capital Structure
Posted: 20 Aug 2001 Last revised: 13 Jan 2009
There are 3 versions of this paper
Market Timing and Capital Structure
Number of pages: 48
Posted: 30 Apr 2001
Last Revised: 13 Jan 2009
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5,835
Market Timing and Capital Structure
NYU Working Paper No. 2451/31357, NYU Working Paper No. FIN-11-024
Number of pages: 32
Posted: 14 Dec 2011
Downloads
852
Abstract
It is well known that firms are more likely to issue equity when their market values are high, relative to book and past market values, and to repurchase equity when their market values are low. We document that the resulting effects on capital structure are very persistent. As a consequence, current capital structure is strongly related to past market values. The results suggest the theory that capital structure is the cumulative outcome of past attempts to time the equity market.
Keywords: capital structure, market timing, ipo, seo
JEL Classification: G32
Suggested Citation: Suggested Citation
Baker, Malcolm P. and Wurgler, Jeffrey A., Market Timing and Capital Structure. Journal of Finance, Vol. 57, No. 1, pp. 1-32, February 2002, Available at SSRN: https://ssrn.com/abstract=276574
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