The practice of and motivation for equity recycling: Evidence from the Asia-Pacific region

Fairhurst, Douglas (dj) and Yoonsoo Nam

Pacific-Basin Finance Journal, 2019, vol. 57, issue C

Abstract: Equity recycling is the practice of contemporaneously raising equity and paying out to shareholders. We document evidence of equity recycling in the Asia-Pacific region. Exploiting variation in factors across Asia-Pacific markets, we find stronger evidence of recycling when financial constraints are not binding. Specifically, equity recycling is more prevalent in markets with greater financial development and during non-crisis time periods. Also, the practice is most pronounced for firms unlikely to face internal financial constraints. We also find evidence that equity recycling in the Asia-Pacific region is consistent with shareholders' interests and not a result of market timing by managers.

Keywords: Equity recycling; Corporate governance; Financial constraints; Payout policy; Equity issuance (search for similar items in EconPapers)
JEL-codes: E44 F30 G15 G32 G35 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x19301295

DOI: 10.1016/j.pacfin.2019.07.002

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