Market timing of corporate debt issuance: prediction or reaction?

Bilei Zhou, Jie Michael Guo, Xiaohong Chen and Tian Yang

Applied Financial Economics, 2012, vol. 22, issue 21, 1753-1769

Abstract: This article examines whether managers can successfully time the debt market when firms issue debt. The question arises from the debate about whether the empirical evidence that corporate debt issues are correlated to the debt market condition factors reveals the underlying market timing ability. The existence of a causal link between market condition variations and debt issuance is examined by distinguishing the predictions of future market variation from the reactions to past information. It is found that, in the sense of predicting the future market fluctuations, firms are generally unsuccessful. In contrast, their debt issue decisions are heavily driven by the reactions to prior information.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/09603107.2012.669460 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:22:y:2012:i:21:p:1753-1769

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603107.2012.669460

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().