Dynamic Capital Structure with Heterogeneous Beliefs and Market Timing

2011 ◽  
Author(s):  
Baozhong Yang
Keyword(s):  
Capital Structure ◽  
Market Timing ◽  
Heterogeneous Beliefs ◽  
Dynamic Capital Structure

Market Timing and Capital Structure

CFA Digest ◽  
2002 ◽  
Vol 32 (3) ◽  
pp. 9-10
Author(s):  
Charles F. Peake
Keyword(s):  
Capital Structure ◽  
Market Timing

scholarly journals IPO Market Timing and Capital Structure: Evidences from Brazil

2014 ◽  
Vol 8 (1) ◽  
Author(s):  
Luiz Felipe Jostmeier Vallandro ◽  
João Zani ◽  
Carlos Eduardo Schonerwald da Silva
Keyword(s):  
Capital Structure ◽  
Market Timing

scholarly journals Determinan Leverage Optimal Di Bursa Efek Indonesia

2020 ◽  
Vol 17 (1) ◽  
pp. 94-107
Author(s):  
Purwanto Widodo ◽  
Juardi Juardi
Keyword(s):  
Capital Structure ◽  
Dynamic Models ◽  
Stock Exchange ◽  
Dynamic Panel Data ◽  
Method Of Moment ◽  
Manufacturing Companies ◽  
Macroeconomic Factors ◽  
Trade Off ◽  
Optimal Leverage ◽  
Dynamic Capital Structure

Research on capital structure, recently characterized by the use of dynamic capital structure. The use of dynamic capital structure basically wants to know the existence of optimal leverage as hypothesized by Trade-Off Theory and Speed off Adjustment (SOA) to optimal leverage. This research tries to overcome this problem, by using dynamic panel data by using company characteristics and macroeconomic factors. The use of General Method of Moment (GMM) to overcome the problem of econometrics due to the use of dynamic models. Samples taken from manufacturing companies listing on the Indonesia Stock Exchange 2009-2015. The inference model and the determinant behavior of capital structure can be explained by Trade-Off Theory and Pecking Order Theory. The variable characteristics of the company and macro economy are significant and are marked according to the hypothesis. The findings of this study include: the influence of profitability, size, tangibility, growth opportunity and business risk. In addition, on average companies in Indonesia can increase their debt to utilize tax shields

scholarly journals The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Razali Haron ◽  
Naji Mansour Nomran ◽  
Anwar Hasan Abdullah Othman ◽  
Maizaitulaidawati Md Husin ◽  
Ashurov Sharofiddin
Keyword(s):  
Capital Structure ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Dynamic Environment ◽  
Order Theory ◽  
Ownership Concentration ◽  
Content Type ◽  
Dynamic Panel Model ◽  
The Impact ◽  
Dynamic Capital Structure

Purpose This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories. Design/methodology/approach This study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern. Findings Growing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory. Research limitations/implications This study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry. Originality/value The insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature.

Equity market timing and capital structure: evidence on post-IPO firms in Indonesia

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dewi Ratih
Keyword(s):  
Capital Structure ◽  
Market Timing ◽  
Equity Market ◽  
Content Type ◽  
Corporate Capital ◽  
Corporate Capital Structure ◽  
Short Run ◽  
Practical Implications ◽  
Equity Market Timing

Purpose The purpose of this paper is to analyze and evaluate the impacts of equity market timing on corporate capital structure policies in Indonesia by apply Baker and Wurgler’s analytical approach to firms in Indonesia to see, first, if that approach applies to Indonesian firms and, second, if it can be generalized to other emerging markets. Design/methodology/approach This study will focus on capital structure policies based on Market Timing Theory in developing countries, which uses the panel data of companies listed in Indonesian Stock Exchange after IPO. The companies used as research object are 70 firms in the non-financial/non-banking sector with the observation period of 2000–2015. The period of measurement is five years after IPO. Using a past market value in which equity market timing is measured in two-time measurements, i.e. yearly timing and long-term timing to prove its persistence. Findings Consistent with equity market timing theory, the results suggest that firms tend to issue equities when their market valuations are relatively higher than their book values and their past market values are high. As a consequence, the firms become underleveraged or have their debts reduced in the short run. The results of long-term measurement on equity market timing do not appear to affect the firms’ capital structure decisions due to the firms’ relatively quick adjustments of optimal capital structures. The conclusion is that equity market timing is an important element in the short run but not in the long run. Research limitations/implications The results of this study describe how firms in Indonesia take advantage of temporary market share fluctuations through equity market timing in their capital structure policies before ultimately making adjustments to the directions they are targeting. Practical implications The use of equity market timing is more aimed at reducing the debt ratio and avoiding unfavorable conditions in the debt market, as well as taking advantage of the capital gains derived from the differences in their stock prices. This study also has practical implications on investment policies that need to consider the adaptation factor of the industrial environment when it comes to making capital structure decisions, including how the entity must take policy when uncertain economic conditions. Social implications Through the research behavior of capital structure more in-depth decision is expected to provide an overview for investors widely in determining investment policy. Thus, the investment strategy is more planned and can also anticipate unexpected conditions. Originality/value This research is the first study to analyze and to evaluate the impacts of equity market timing on corporate capital structure policies on post-IPO firms in Indonesia. This research is an empirical study that investigates the relevance of equity market timing considerations in the determination of debt-equity choices in the capital structure, included in the conditions of the global financial crisis.

scholarly journals The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms

2018 ◽  
Vol 10 (8) ◽  
pp. 117
Author(s):  
Jyoti Gupta ◽  
Florian Wagner
Keyword(s):  
Capital Structure ◽  
Abnormal Return ◽  
Market Timing ◽  
Structure Optimization ◽  
Share Price ◽  
Open Market ◽  
Timing Ability ◽  
Announcement Returns ◽  
Positive Abnormal Return ◽  
Book Values

Using a comprehensive sample of 1830 open-market repurchases of 15 European countries encompassing the period from 1998 until 2013, we analyzed the magnitude and determinants of the share price reaction on announcement. Our results indicate that buyback announcements in Europe lead on average to a significantly positive abnormal return of 0.92% on announcement day, however, decreasing in firm size and announcement frequency. Additionally, our findings show that the market does not particularly greet the distribution of excess cash to shareholders, but rather when companies take advantage of undervalued stock as market-to-book values are inversely related to announcement returns. Looking at the companies’ leverage ratios, the motive of capital structure optimization cannot be supported by the empirical findings. Lastly, with respect to managerial market timing ability we could not observe that buybacks are following a period of share price underperformance, concluding that managers are not able to time the implementation of buyback programs.

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