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The Impact of Market Timing on Canadian and U.S. Firms' Capital Structure

Zhaoxia Xu

Staff Working Papers from Bank of Canada

Abstract: This paper studies the impact of market timing on Canadian firms' capital structure and makes a comparison with U.S. firms. There is no evidence that market timing affects Canadian firms' capital structure in the same manner as it affects their U.S. counterparts. The effect of past equity issues on Canadian firms' capital structure is transitory. Canadian firms adjust at a faster rate toward the leverage target than U.S. firms. These results challenge the generality of the market-timing theory of capital structure.

Keywords: Financial markets; International topics (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009
New Economics Papers: this item is included in nep-bec and nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:09-1

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