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

Yang Zhao, Cheng Few Lee and Min-Teh Yu ()

The British Accounting Review, 2020, vol. 52, issue 1

Abstract: This paper uses the change in individual securities accounts as a measure of equity funding supply to examine whether the persistent timing effect on capital structure exists for the Chinese equity market. This new equity timing measure avoids previous criticisms over a timing measure not being independent of a firm's characteristics of capital structure. Our empirical results show that this new measure is an effective market timing variable for issuing equity in the Chinese equity market, and that a persistent effect of equity market timing on firm capital structure exists for more than 7 years. This paper offers evidence that the market conditions of equity funding supply play an important role in corporate financing decisions in China.

Keywords: Cost of equity; Equity market timing; Capital structure; Equity funding supply; Chinese IPO; Securities accounts (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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Chapter: Does Equity Market Timing have a Persistent Impact on Capital Structure? Evidence from China (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:52:y:2020:i:1:s0890838919300642

DOI: 10.1016/j.bar.2019.100838

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